The Indian government is set to table a bill in the Winter session of Parliament, aiming to raise the foreign direct investment (FDI) cap in the insurance sector from the current 74 % to 100 %.
What the Bill Proposes
Under the proposed Insurance Laws (Amendment) Bill 2025, foreign investors would be permitted full ownership of insurance companies operating in India — provided the companies invest all collected premiums within the country. Alongside the FDI cap hike, the bill seeks to amend foundational statutes including the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. Moreover, regulatory simplifications — such as reduced paid-up capital requirements and the introduction of a composite licence allowing insurers to offer multiple types of insurance under a single entity — are also on the agenda.
The Rationale
Allowing 100 % FDI will infuse fresh capital and global expertise into the insurance industry, enabling companies to scale faster, adopt advanced risk-management practices, and expand distribution across the country. With insurance penetration in India reportedly at a mere 3.7 % in 2023–24, compared to a much higher global average, there is substantial room for growth. The move is also intended to support the government’s long-term goal of achieving “Insurance for All by 2047.”
Expected Impact
Full foreign ownership may motivate global insurers to enter or expand in India without needing an Indian partner — potentially accelerating the entry of international players, increasing competition, and improving product quality and customer service. For policyholders, this could translate into more options, competitive premiums, and improved claim-settlement efficiency as insurers tap better capital, technology, and operational practices.
At the same time, the increased capital inflows and expanded market participation may boost employment opportunities, foster innovation, and create a more robust and competitive insurance sector in India.