Greater FDI in insurance to promote competition, increase penetration: FM
GST
Dated:- 16-12-2025
PTI
New Delhi, Dec 16 (PTI) Finance Minister Nirmala Sitharaman on Tuesday said that raising the FDI limit to 100 per cent in the insurance sector will help attract more capital, improve competition and increase insurance penetration by making policies more affordable.
Replying to the debate on the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, in the Lok Sabha, Finance Minister Nirmala Sitharaman said the proposed removal of the upper cap on FDI in the insurance sector would ensure capital flow in the sector.
This will ensure that the country benefits from better technology and world-class risk assessment models, as well as the best insurance products available anywhere in the world, she said, adding that FDI will attract more players and make insurance policies more affordable.
“Monopoly doesn't give us that advantage, and therefore, the more the compe
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o 100 per cent.
It also paves the way for the merger of a non-insurance company with an insurance firm.
The finance minister said that the government led by Prime Minister Narendra Modi raised the FDI limit for insurance companies from 26 per cent to 49 per cent in 2015 and from 49 per cent to 74 per cent in 2021 to attract global capital and technical know-how.
Similarly, the FDI limit for insurance intermediaries was raised to 100 per cent in 2019 to enable them to provide better advisory services to citizens.
To make insurance more affordable, Sitharaman said the 56th GST Council Meeting held in September unanimously agreed to remove GST on individual life and health insurance premiums.
There is now a nil GST rate, which was earlier 18 per cent on all individual life insurance policies and individual health insurance policies and this is a significant tax relief that directly reduces the cost of premiums for policyholders, encouraging more people to insure themselves and t
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corporate structure.
In addition, the bill seeks to provide greater autonomy to Life Insurance Corporation of India (LIC).
“We are providing autonomy to LIC to open zonal offices and aligning compliance for its foreign offices with the laws and regulations which prevail in the respective jurisdictions,” she said.
The Bill also proposed rationalising the penalties imposed by the regulator and increasing the penalty limit to Rs 10 crore.
“Earlier, the fine of one crore, which we are now proposing to increase to Rs 10 crore, was only applicable to the insurance companies and not for the intermediaries. Now we are bringing both on board, and both will be at Rs 10 crore penalty, so that they will be some deterrent from compliance oversights as a result of which many of the policyholders suffer,” she said.
With regard to the term of office of the Chairperson and other whole-time members, the Bill provides for a five-year term or until they attain the age of 65 years, whichever is e
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