FDI boost: Finance minister Nirmala Sitharaman signals introduction of Insurance Amendment Bill; may be tabled this Winter session

Finance minister Nirmala Sitharaman has indicated that the Insurance Amendment Bill, which proposes to raise foreign direct investment (FDI) in India’s insurance sector to 100 per cent, is likely to be introduced in Parliament during the upcoming Winter session, which is likely to commence from the second half of November."I hope to," she told news agency PTI when asked whether the bill to further liberalise FDI in insurance could be tabled in the session. In this year’s Budget speech, Sitharaman had proposed raising the FDI limit from the current 74 per cent to 100 per cent under new-generation financial sector reforms. She noted that the enhanced limit would be available only to companies investing the entire premium within India, with existing guardrails and conditionalities being reviewed and simplified.The insurance sector has so far attracted Rs 82,000 crore through FDI, highlighting growing foreign interest. The proposed amendments cover the Insurance Act, 1938, the Life Insurance Corporation (LIC) Act, 1956, and the Insurance Regulatory and Development Authority (IRDAI) Act, 1999. Key changes include raising FDI to 100 per cent, reducing paid-up capital requirements, and introducing provisions for a composite licence.The amendments to the LIC Act aim to empower its board to take operational decisions independently, such as branch expansion and recruitment.These legislative changes are designed to enhance policyholders’ interests, strengthen financial security, and encourage greater participation by private and foreign players in the sector. Analysts say this could lead to higher insurance penetration, ease of doing business, economic growth, and job creation across the country.Currently, India has 25 life insurance companies and 34 non-life insurers, including specialised firms such as the Agriculture Insurance Company of India Ltd and ECGC Ltd. The FDI cap in the sector has been raised multiple times over the last decade: from 26 per cent to 49 per cent in 2015, and then from 49 per cent to 74 per cent in 2021, as per PTI.By enabling full foreign ownership, the government aims to attract greater investment, facilitate innovation and expand coverage to more policyholders, contributing to the goal of ‘Insurance for All by 2047’.