Opposition Protests as Govt Introduces Bill to Raise FDI in Insurance to 100%

A bill seeking to raise foreign direct investment (FDI) in the insurance sector from the existing 74 per cent to 100 per cent was introduced in the Lok Sabha on Tuesday amid strong protests from Opposition parties, who warned against opening a sensitive sector fully to foreign ownership.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 proposes amendments to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. Introducing the bill, Union Finance Minister Nirmala Sitharaman said expanding insurance coverage for common people has always been a priority of Prime Minister Narendra Modi and the Centre, noting that insurance benefits were extended to marginalised sections even during the Covid-19 pandemic.

Sitharaman said objections raised by Opposition members could be taken up during the debate and assured the House that she was prepared to respond to all concerns related to the proposed legislation.

Opposing the introduction of the bill, RSP MP N K Premachandran criticised its nomenclature, saying the title had no connection with its contents. He also objected to the proposal to allow 100 per cent FDI in the insurance sector, arguing that such a move could undermine public interest. DMK MP T Sumathy strongly opposed full foreign ownership, while Trinamool Congress MP Saugata Roy said the bill’s name resembled slogans of the ruling coalition and should not be used for legislation. He described the proposal to permit 100 per cent FDI as a backward step for the insurance sector.

According to the draft bill, while the FDI cap will be raised to 100 per cent, at least one of the top officials—Chairman, Managing Director or Chief Executive Officer—must be an Indian citizen. The bill also allows the merger of a non-insurance company with an insurance company.

The proposed legislation, which received Union Cabinet approval on Friday, aims to accelerate growth and development of the insurance sector and ensure better protection of policyholders. It provides for the establishment of a Policyholders’ Education and Protection Fund, improves ease of doing business for insurance companies and intermediaries, enhances regulatory oversight, and brings greater transparency in regulation-making.

The bill also revises the tenure of the Chairperson and whole-time members of the insurance regulator to five years or until they attain the age of 65 years, whichever is earlier. At present, the upper age limit for whole-time members is 62 years, while it is 65 years for the Chairperson.

In addition, amendments to the LIC Act seek to empower its board to take operational decisions such as branch expansion and recruitment. Sitharaman had announced the proposal to raise the FDI limit to 100 per cent in her Budget speech this year as part of new-generation financial sector reforms. So far, the insurance sector has attracted around Rs 82,000 crore in foreign investment.

The government said the amendments are aimed at promoting policyholders’ interests, enhancing financial security, encouraging the entry of new players, and driving economic growth and employment generation, even as the Opposition continues to voice strong reservations over the move.