Parliament on Wednesday passed a Bill to raise foreign direct investment (FDI) in the insurance sector to 100% from the current 74%, a move expected to attract higher foreign capital inflows, support the adoption of global governance and innovation standards, and deepen insurance penetration in the country.
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 was cleared by the Rajya Sabha through a voice vote, a day after it was passed by the Lok Sabha. Finance Minister Nirmala Sitharaman said the amendments would enable foreign insurers to bring in more capital, adding that the gradual opening up of the sector has already helped improve insurance penetration and that there is “scope for more”.
She said raising the FDI cap to 100% would pave the way for more foreign insurers to enter India, noting that many global players are deterred by the need to find joint venture partners. Sitharaman also expressed confidence that increased competition would lead to lower premiums.
Global capital and competitive governance standards
Rakesh Jain, CEO, IndusInd General Insurance Company Limited (formerly Reliance General Insurance Co. Ltd.), said allowing 100% FDI goes beyond capital infusion. “It fundamentally enhances the sector’s ability to underwrite larger and more complex risks, build long-term technical capacity, and bring global standards of governance and innovation into the Indian market,” he said.
“This reform directly addresses the industry’s long-standing need for stronger balance sheets, enabling insurers to invest meaningfully in advanced underwriting, digital infrastructure, and climate-resilient risk solutions,” Jain added.
Addressing concerns over employment, Sitharaman said the reforms would create more jobs, citing data showing that employment in the sector has nearly tripled since the FDI limit was raised from 26% to 74%. She rejected Opposition claims that the Bill was rushed, stating that consultations had been held over nearly two years.
Empowering IRDAI
The Sabka Bima Sabki Raksha Act, 2025 also significantly strengthens the enforcement and supervisory powers of the Insurance Regulatory and Development Authority of India (IRDAI). Under the amendments, the IRDAI chairperson will be empowered to order searches, seizures and inspections if there is reason to believe that insurers or related entities have failed to produce documents, withheld information relevant to an investigation, or are likely to tamper with records. The Act also allows for the merger of a non-insurance company with an insurance firm.
Alok Agarwal, MD & CEO, Zurich Kotak General Insurance, said the amendments streamline capital requirements for reinsurers and enhance IRDAI’s supervisory and enforcement framework, balancing growth with governance. “What’s equally impactful are its measures to promote transparent regulation, reinforce KYC processes, enhance data protection, and the proposed establishment of a dedicated Policyholders’ Education and Protection Fund, together laying the foundation for a more resilient, agile, trustworthy, and globally competitive insurance ecosystem,” he added.