The Rajya Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, on 17 December, raising FDI in insurance to 100 per cent from 74 per cent, sparking hopes for growth amid calls for consumer safeguards.
The upper house of Parliament approved the landmark bill late Wednesday, fulfilling a long-standing industry demand to attract global capital into India’s underpenetrated insurance sector.
Introduced in the Lok Sabha on 4 December by Finance Minister Nirmala Sitharaman, it amends the Insurance Act, 1938, IRDA Act, 1999, and LIC Act, 1956. The BJP-led NDA secured 120 votes in favour, with support from TMC and some independents, while AIADMK opposed it over foreign dominance fears.
Insurers celebrated the move as a “game-changer,” but consumer groups like CII’s consumer panel stressed data privacy and rural outreach. No disruptions marked the passage, with implementation eyed for Q1 2026 via IRDAI norms.
Unlocking Full Foreign Investment
This reform removes the final barrier to wholly-owned foreign insurance firms, potentially injecting $10-20 billion over the next five years, per FICCI estimates.
India’s insurance penetration lags at 4.2 per cent of GDP-far below global averages of 7 per cent-despite a 15.2 per cent sector growth in 2024-25, driven by post-pandemic health demand. Premiums collected hit ₹10.5 lakh crore last fiscal, yet only 37 per cent of Indians have any coverage.
Finance Minister Sitharaman, during her closing Lok Sabha speech, emphasised inclusivity: “Full FDI will fuel innovation, slash premiums by 10-15 per cent, and extend policies to remote villages, embodying Sabka Bima, Sabki Raksha.”
IRDAI Chairperson Debasish Panda reinforced this, telling reporters post-passage, “Stricter solvency margins and localisation rules will protect policyholders.” Industry voices chimed in: HDFC Life CEO Vibha Padala predicted “faster claims processing via tech from global giants,” while Bhargav Dasgupta of ICICI Lombard forecast 20 million new customers annually.
Human stories underscore the stakes-a Delhi autorickshaw driver, Ravi Kumar, shared with The Logical Indian, “Affordable health cover saved my family from debt last year; more competition means hope for us daily wagers.”
A Decade of Liberalisation Steps
The journey began in 1999 with private players entering a state-dominated market, followed by 26 per cent FDI in 2000, hiked to 49 per cent in 2015 under the UPA government, and 74 per cent in 2021 via ordinance amid COVID pressures.
The 2024 Budget speech by Sitharaman reignited 100 per cent calls, citing economic recovery and global benchmarks like the US (unrestricted FDI). Pre-passage consultations with 15 state governments and 200 stakeholders shaped safeguards, including mandatory 50 per cent local board representation.
Debates revealed divides: AIADMK’s C. Robert Bruce warned, “Foreign firms may cherry-pick profits, leaving rural India exposed,” echoing 2023 protests by unions fearing 50,000 job losses. Conversely, NITI Aayog’s recent report countered with data showing 74 per cent FDI already created 3 lakh jobs since 2021.
Post-passage, BlackRock and Japan’s SoftBank signalled interest, with Allianz eyeing a buyout of domestic players. Economists like ICRIER’s Rajat Kathuria note, “This aligns with Atmanirbhar Bharat by mandating tech transfer.” Yet, a 2025 PwC survey found 62 per cent of urban Indians wary of foreign data handling, prompting IRDAI’s promised cybersecurity framework.
Opposition Views
- AIADMK’s Strongest Objection (Led by C. Robert Bruce): AIADMK MPs, including Bruce, voted against the bill, warning it hands “full control to foreign sharks” who could “cherry-pick urban profits while ignoring rural India.” Bruce stated in Rajya Sabha: “This risks nationalising losses and privatising gains-our data, our customers, sold out. Where’s the Atmanirbhar in this?” They demanded a 25-year lock-in for foreign funds and veto powers for Indian regulators.
- Congress Concerns on Job Losses and Privacy (Mallikarjun Kharge et al.): While partially supportive, Congress leader Kharge criticised the haste, saying, “Good intent, but no MSME safeguards-expect 50,000 job cuts as foreigners consolidate.” They highlighted data privacy fears, citing a 2024 Cambridge Analytica-style breach in a foreign insurer’s Indian arm. Congress pushed (unsuccessfully) for mandatory 70% Indian ownership in first five years.
- TMC’s Conditional Backing with Caveats (Derek O’Brien): TMC supported but voiced unease over “premium hikes for marginals.” O’Brien tweeted post-vote: “100% FDI? Fine, but cap foreign voting rights at 49% and enforce rural quotas-or it’s Bengal’s insurers first to fold.” They stressed mis-selling scandals, referencing 2023 IRDAI fines on 15 foreign-linked firms totalling ₹200 crore.
Government’s Roadmap Ahead
Implementation hinges on presidential assent, expected by year-end, followed by IRDAI notifications. The bill mandates foreign insurers to list 25 per cent equity on Indian exchanges within five years and prioritise underserved segments like micro-insurance for farmers.
Sitharaman announced a ₹5,000 crore Insurance Development Fund in her reply, targeting zero penetration districts. Opposition leader Mallikarjun Kharge praised the intent but urged amendments for MSME focus: “Reforms must not sideline the aam aadmi.”
Stakeholder reactions poured in overnight: FICCI President Anant Rajvanshi called it “a Diwali gift for growth,” while consumer activist Bejon Misra cautioned, “Watchdog IRDAI must bite harder on mis-selling.”
Global rating agency Moody’s upgraded India’s insurance outlook to “stable,” predicting deeper market integration with fintechs like Paytm Insurance.
The Logical Indian’s Perspective
This bold step towards a resilient insurance ecosystem promises financial shields for vulnerable families, nurturing harmony in a nation where medical emergencies often fuel despair and debt.
Yet true progress demands empathy-robust regulations to curb predatory practices, equitable rural access, and dialogue among regulators, foreigners, and citizens to foster trust and coexistence.
By prioritising kindness in capitalism, India can redefine security for all.
