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RS passes bill for 100% FDI in insurance
Rajya Sabha passed a bill allowing 100% FDI in insurance to boost growth, despite opposition concerns over privatization and domestic impact.
The Rajya Sabha on Wednesday passed a bill to allow 100% foreign direct investment (FDI) in insurance in a move aimed at boosting capital inflows and expanding one of the world’s fastest-growing insurance markets.
The upper house of Parliament, through a voice vote, passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, to raise FDI in the insurance sector from 74% to 100% amid strong demands by the Opposition that the proposed legislation be sent to a select committee for parliamentary scrutiny. The bill was passed by the Lower House a day ago and is now set to become law.
Replying to the debate, finance minister Nirmala Sitharaman said removing the upper cap in FDI will help the sector grow and boost competitions. She said policyholders’ interests would continue to remain protected and measures had been introduced to strengthen regulatory oversight.
Several Opposition MPs raised doubts over whether the bill will pave the way for the privatisation of the state-backed Life Insurance Corporation.
“The statutory strength of the LIC is still intact and flourishing,” Sitharaman said, adding that the total business of LIC now stood at ₹55.52 lakh crore, an all-time high, and its solvency ratio had increased to 2.21 from 1.98 in recent times. Net value of new business of the publicly owned insurance major stood at ₹1011 crore, the finance minister said.
“More competition will bring down premium rates for the policyholders. That is why we want to have more FDI,” she said.
The FM said the new bill will also boost ancillary activities, such as technology infusion, creating more jobs, especially for students of actuarial sciences, which deals with insurance management.
Removing the FDI cap is expected to attract global capital and expertise in a country where general insurance penetration is still relatively low at 1% of GDP, according to government data. The global average was 4.2% in 2023, according to World Bank data.
According to the finance minister, foreign companies will have to mandatorily participate in government insurance schemes and caps on how much premiums insurance firms can charge policyholders will continue.
CPI(M)’s Brittas said John Brittas said the bill will have a disastrous impact on domestic companies. “What has happened to the rupee? No FDI. Even your friends in India are investing elsewhere,” he said.
DMK MP Kannimozhi NVN Soumu opposed the bill, saying it will only “facilitate an indirect route for the black money to flood into the country” and “handicap the public sector.”
