Bill to hike FDI in insurance sector to 100% to be tabled in winter session

The government proposes to introduce a bill to raise foreign direct investment in the insurance sector to 100 per cent in the upcoming Winter session of Parliament.

The Winter session of Parliament is slated to begin on December 1 and continue till December 19. The session will have 15 working days.

According to a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill 2025, which seeks to deepen penetration, accelerate growth and development of the insurance sector and enhance ease of doing business, is part of the 10 legislations listed for the upcoming session of the Parliament.

Finance Minister Nirmala Sitharaman in this year's Budget speech, proposed to raise the foreign investment limit to 100 per cent from the existing 74 per cent in the insurance sector as part of new-generation financial sector reforms.

So far, the insurance sector has attracted Rs 82,000 crore through foreign direct investment (FDI).

The finance ministry has proposed amending various provisions of the Insurance Act, 1938, including raising FDI in the insurance sector to 100 per cent, reducing paid-up capital, and introducing a composite licence.

As part of a comprehensive legislative exercise, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999 will be amended, alongside the Insurance Act 1938.

The amendments to the LIC Act propose empowering its board to take operational decisions, such as branch expansion and recruitment.

The proposed amendment primarily focuses on promoting policyholders' interests, enhancing their financial security, and facilitating the entry of additional players into the insurance market, thereby driving economic growth and employment generation.

Such changes will help enhance the efficiency of the insurance industry, enabling ease of doing business and enhancing insurance penetration to achieve the goal of 'Insurance for All by 2047'.

The Insurance Act of 1938 serves as the principal Act to provide the legislative framework for insurance in India. It provides the framework for the functioning of insurance businesses and regulates the relationships among insurers, their policyholders, shareholders, and the regulator, Irdai.

The finance ministry would also introduce the Securities Markets Code Bill (SMC), 2025. The Bill seeks to consolidate the provisions of the Securities and Exchange Board of India Act 1992, the Depositories Act 1996 and the Securities Contracts (Regulation) Act 1956 into a rationalised single Securities Markets Code.

The other agenda of the finance ministry, as per the bulletin, is the presentation of the first batch of Supplementary Demands for Grants for 2025-26.

The government seeks Parliamentary approval for additional expenditure outside the Budget through Supplementary Demands for Grants. The second and final batch of Supplementary Demands for Grants will be presented in the Budget session, likely to begin towards the end of January.