NEW DELHI: The Union Cabinet on Friday approved a proposal to raise the foreign direct investment (FDI) limit in insurance firms from 74% to 100%, and usher in a set of structural reforms to strengthen the sector. The move is expected to draw substantial foreign capital, increase competition, and improve customer services across India’s insurance market.

The government is likely to introduce the Insurance Laws (Amendment) Bill, 2025 in Parliament on Monday, a senior finance ministry official confirmed.

By lifting the cap, the government aims to attract long-term global investors and deepen the sector’s capital base.

“A more open market is expected to foster greater competition, leading to innovative product development, superior customer service standards, and the adoption of global best practices and technology,” said Narendra Ganpule, partner and insurance industry leader, Grant Thornton Bharat.

The Centre expects that the higher ownership limit will unlock fresh global capital, enabling companies to scale operations, expand distribution, develop new products and enhance service standards. The government believes higher investment and competition will help extend insurance coverage to a wider population. Greater competition could also create jobs and improve efficiency.