Bill to Hike FDI in Insurance Sector to 100%
The Centre is set to introduce a significant reform in the insurance sector by proposing a bill to increase foreign direct investment (FDI) to 100% during the upcoming Winter session of Parliament.
– Session Dates: The Winter session will be in session for 15 days, from December 1 to December 19.
– Legislative Agenda: The Insurance Laws (Amendment) Bill 2025 is one of ten critical legislations scheduled for review.
– Goals of the Bill:
– Enhance insurance penetration.
– Foster growth and development in the insurance sector.
– Improve the ease of doing business for insurers.
In his Budget speech, Finance Minister Nirmala Sitharaman emphasized increasing the FDI limit from 74% to 100% under new-generation financial reform initiatives. To date, the insurance sector has attracted approximately Rs 82,000 crore in FDI.
– Amendments: The upcoming changes also entail revising various provisions of the Insurance Act, 1938, particularly those concerning paid-up capital and the introduction of composite licences.
– Additional Legislative Changes: Amendments will extend to the Life Insurance Corporation Act of 1956 and the Insurance Regulatory and Development Authority Act of 1999, aiming to empower the LIC board in operational decision-making.
Expected Outcomes
These reforms are designed to prioritize policyholder interests, bolster financial security, and facilitate greater market entry, which is predicted to fuel economic growth and job creation. The overarching objective is to achieve Insurance for All by 2047, while enhancing industry efficiency and accessibility.
Furthermore, the finance ministry plans to introduce the Securities Markets Code Bill (SMC) 2025, which consolidates multiple regulatory frameworks into a single entity. Additionally, the ministry will present the first batch of Supplementary Demands for Grants for 2025-26, seeking parliamentary approval for further expenditures beyond the initial budget.
In conclusion, the bill to hike FDI in the insurance sector to 100% represents a pivotal shift aimed at revitalizing the industry, encouraging foreign investment, and ultimately ensuring that comprehensive insurance solutions are available to all citizens.