The Indian government has approved a proposal to raise foreign investment in the insurance sector from 74% to 100%. This move is expected to attract global insurance companies, enhance competition, reduce premiums, and provide better options and services for policyholders.
A major transformation is on the horizon for India’s insurance sector. The central government has approved a bill to increase the foreign direct investment (FDI) limit in insurance companies from 74% to 100%. If passed by Parliament, this legislation will make it easier for global insurance companies to enter the Indian market.
Industry experts believe this move could benefit consumers by offering cheaper insurance, improved services, and a wider range of options. With demand for insurance policies rising consistently, this decision marks a new beginning for the sector. The entry of foreign companies is expected to boost competition, directly benefiting policyholders.
With the FDI limit increased to 100%, global insurance companies will be able to invest more in India, leading to heightened competition. This could result in lower premiums and more affordable insurance options for consumers.
Policyholders can expect:
International-standard insurance products
More choices of policies
Better customer service
Faster and transparent claim settlements
Additionally, increased foreign investment may create new employment opportunities and boost economic activities. Currently, insurance coverage in India is lower than international standards, and this move could help expand overall coverage.
Sources indicate that the Insurance Laws (Amendment) Bill 2025 may be presented in the ongoing winter session of Parliament. This bill is among the 13 key bills in the government’s agenda. Its primary objective is to expand the insurance sector and accelerate its growth.
Finance Minister Nirmala Sitharaman proposed raising the FDI limit to 100% in this year’s budget. The Finance Ministry states that this move will bring in foreign capital, increase competition, and provide better services to customers. According to government data, around ₹82,000 crore has already been invested in the insurance sector through FDI so far.
The proposed amendments will affect the following laws:
Insurance Act, 1938
LIC Act, 1956
IRDAI Act, 1999
Changes include:
Increasing the FDI limit
Reducing paid-up capital requirements
Introducing a unified licensing framework
Granting LIC more autonomy in decisions related to branch expansion and recruitment
The government believes these reforms will enhance efficiency, simplify processes, and protect policyholders’ interests. These measures are expected to help India achieve the goal of “Insurance for All” by 2047.