Rajya Sabha passes Sabka Bima Sabki Raksha Bill 2025 raising insurance FDI to 100 percent. The reform aims to modernise India’s insurance sector, boost foreign investment, strengthen policyholder protection, and achieve universal insurance coverage by 2047.
The Rajya Sabha on Wednesday passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 through a voice vote after an intense and often polarised debate between the ruling alliance and opposition parties. The legislation marks a major reform in India’s insurance sector by allowing up to 100 percent foreign direct investment (FDI), up from the existing 74 percent cap.
The Bill, which had already been cleared by the Lok Sabha on December 16, seeks to amend three key laws governing the sector — the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. The government has projected the reforms as a crucial step towards modernising the insurance ecosystem and realising the goal of “Insurance for All by 2047”.
Union Finance Minister Nirmala Sitharaman, while replying to the debate, defended the legislation and rejected allegations that it would weaken public sector insurers or compromise policyholder interests. She said the Bill aims to accelerate growth, deepen insurance penetration, attract global capital, and enhance consumer protection while maintaining regulatory oversight.
Highlighting the government’s commitment to public sector insurers, Sitharaman said that an infusion of Rs 17,450 crore had been made into three non-life public sector insurance companies in recent years. This capital support, she noted, helped generate record profits for major institutions such as the Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), and the Agriculture Insurance Company of India Limited (AICIL) in the previous financial year.
The finance minister presented data to underline the sector’s growth trajectory since 2014. According to her, the number of insurers operating in India increased from 53 to 74 during this period. Insurance penetration rose from 3.3 percent to nearly 3.8 percent, while insurance density increased from $55 to $97 per capita. Total insurance premiums expanded significantly from Rs 4.15 lakh crore to Rs 11.93 lakh crore, and assets under management tripled to Rs 74.43 lakh crore.
Sitharaman explained that progressive increases in the FDI cap — first from 26 percent to 49 percent, then to 74 percent — had strengthened domestic capacity and enabled the entry of foreign reinsurance branches. She added that allowing 100 percent FDI for insurance intermediaries in 2019 improved advisory services and market efficiency.
The finance minister also pointed to recent affordability measures, including the 56th Goods and Services Tax Council decision to reduce GST on individual life and health insurance premiums from 18 percent to zero. This move, she said, would make insurance products more accessible to ordinary citizens.
Citing consumer-centric initiatives, Sitharaman highlighted the ‘Aapki Punji, Aapka Adhikar’ campaign, which helped return over Rs 1,000 crore in unclaimed insurance and financial assets through district-level camps. She also mentioned the Bima Bharosa portal, designed to simplify grievance redressal and claim settlement processes.
Addressing concerns about market discipline, the minister assured the House that all insurers would continue to be bound by mandatory rural and social sector obligations, ensuring coverage for underprivileged and rural populations. She said penalties for regulatory violations would be increased from Rs 1 crore to Rs 10 crore, with the collected amount earmarked for policyholder education and awareness.
Sitharaman further clarified that there would be regulatory checks on premium pricing. Private players, she said, would not be allowed to arbitrarily fix premiums, nor would they be permitted to exclusively run government-backed schemes without oversight, as is currently seen in crop insurance programs.
However, opposition parties mounted strong resistance to the Bill. Dr Kanimozhi NVN Somu of the Dravida Munnetra Kazhagam argued that allowing 100 percent FDI could lead to foreign boards controlling premium structures, raising concerns about black money inflows and erosion of state autonomy. She claimed the Bill disadvantages cooperative insurers and weakens public sector institutions like LIC, remarking that the legislation was “not inclusive but misleading.”
Trinamool Congress MP Saket Gokhale described insurance as a social security instrument rather than a profit-driven enterprise. He accused the government of prioritising capital interests over accountability and questioned the urgency with which the Bill was introduced. Other opposition members demanded that the Bill be referred to a select committee, citing concerns related to data privacy, profit repatriation, and economic sovereignty.
Supporters of the Bill, however, maintained that 100 percent FDI would bring global expertise, innovation, and affordable products to Indian consumers. They argued that strong regulatory safeguards would prevent misuse while enabling the sector to meet the growing demands of a developing economy.
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The passage of the Bill highlights the ongoing challenge of balancing economic liberalisation with domestic protection in a sector that plays a critical role in safeguarding millions of Indian households against financial risk.
