The Union cabinet has approved 100 percent Foreign Direct Investment (FDI) in India's insurance sector. Prime Minister Narendra Modi's cabinet gave the green signal in this regard on Friday. As a result, foreign investors will be able to invest up to 100 percent in various insurance companies in India.
This decision could bring significant changes to India's insurance sector in the coming days. This decision will lead to a rise in competition within the sector. As a result, customer service will also improve, according to experts. Through this decision, new avenues for investment in the Indian market have been opened up to foreign investors.
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When will the decision be formalised?
A requisite bill in this regard is expected to be tabled in the Parliament in the current Winter session, which will run till December 19. Among the 13 legislative items scheduled for discussion in the house, the Insurance Laws (Amendment) Bill 2025 will be brought up for deliberation and subsequent voting. The bill and changes in investment regulations in the insurance sector is being brought to give a boost to the spread of insurance, increase the growth of the sector, and better the ease of doing business, The Economic Times reported.
Finance Minister Nirmala Sitharaman had proposed a rise in the foreign investment cap in insurance companies from 74% to 100% in her Budget speech this year. Till date, the insurance sector has garnered over Rs. 82,000 crore in FDI.
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Which laws will be amended?
Along with the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999 will also be amended. The changes in the LIC Act are being made to increase branches, initiate new hirings, and for the assertion of greater authority over operational matters. Improvement of efficiency, simplification of business operations, and the increment of insurance outreach are central to the reforms to fulfil the government's goal of 'Insurance for All by 2047,' reported The Economic Times.
