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Parliament clears Bill to allow 100% FDI in insurance
The House rejected the demand of the Opposition to send the Bill to a parliamentary panel. The opposition members also objected to the use of Hindi and English words in the Bill’s name.
Replying to a debate on the Bill, Union Finance Minister Nirmala Sitharaman said the amendments would increase insurance penetration in the country, reduce premiums for the people, and also create more jobs.
The Rajya Sabha Wednesday passed by a voice vote the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, increasing the FDI in the insurance sector to 100%, a day after the Lok Sabha cleared it.
The legislation would lead to amendments in the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
The House rejected the demand of the Opposition to send the Bill to a parliamentary panel. The opposition members also objected to the use of Hindi and English words in the Bill’s name.
Replying to a debate on the Bill, Union Finance Minister Nirmala Sitharaman said the amendments would increase insurance penetration in the country, reduce premiums for the people, and also create more jobs. She said the FDI in the sector was increased from the previous 26% to 49% in 2015 and then further to 74% in 2021. She said now the foreign insurance companies will be able to come to India and operate even if they are unable to find an Indian partner. “There are companies that do not find partners in India… even when there are interests shown, money to come in, technology to come in… sometimes they don’t come because there are not enough joint venture partners. Now, with this, they will be able to abide by Indian laws and set up their own business even if they are unable to get a partner,” she said.
She said the Act will make it easier for companies to invest in the sector with their requirement for net owned funds being reduced from Rs 5,000 crore to Rs 1,000 crore, meaning smaller companies will be able to enter the market. Sitharaman said the Act will also protect the rights of the policy holders. The Bill lays down SOPs for the regulator, which will mandate consultation with stakeholders, she said.
Opposing the Bill, Congress MP Shaktisinh Gohil said the increase in FDI was opposed by senior BJP leaders such as Sushma Swaraj, Arun Jaitley, and Yashwant Sinha who headed the Standing Committee that the Bill was sent to. He said BJP’s election manifesto in 2014 declared that the party will not allow FDI in insurance sector.
TMC’s Saket Gokhale said no private insurer was interested in low premium, high risk rural market where protections are provided through government insurance schemes. This will be hampered if foreign players enter, he said, adding the current profits of LIC come from its large market share, but private companies are likely to enter with predatory pricing. CPI(M) MP John Brittas said while government spoke of doing away with ‘gulami ki maansikta’ that is exactly what it was doing with 100% FDI.
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