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Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill

18 Dec 2025 GS 2 Polity

Context

The Rajya Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, a day after its passage in the Lok Sabha, paving the way for 100% Foreign Direct Investment (FDI) in the insurance sector. The House also passed the Repealing and Amending Bill, repealing 71 obsolete laws.

Sabka Bima Sabki Raksha Bill: Key features

1. 100% FDI in insurance

  • Raises FDI limit from 74% to 100%

  • Allows full foreign ownership of insurance companies

  • Removes the requirement of finding Indian joint venture partners

2. Regulatory safeguards

  • Premiums collected from Indian policyholders to remain in India

  • Insurance companies to be regulated under Indian laws and IRDAI framework

  • Foreign insurers mandated to:

    • Participate in social sector and government welfare schemes

    • Comply with obligations applicable to domestic insurers

3. Expected outcomes

  • Increased foreign capital inflow

  • Enhanced competition in insurance market

  • Possible reduction in insurance premiums

  • Greater insurance penetration

Concerns

1. Parliamentary scrutiny

  • Demand to refer the Bill to a Select Committee

  • Argument: far-reaching impact on financial and social security sector

2. Data privacy risks

  • Concerns over use of PAN and Aadhaar

  • Potential increase in digital frauds

  • Risk of sensitive personal data access by foreign entities

3. Profit extraction and PSU weakening

  • Fear of capital outflows through profit repatriation

  • Allegation of neglecting and weakening public sector insurers

  • Claims that foreign investors could corner a large share of India’s insurance market

4. Language and federal sensitivity

  • Criticism over mixing Hindi and English in the Bill’s name

  • Seen as symbolically exclusionary by some MPs

Government’s response

  • Full FDI necessary due to:

    • Difficulty in finding suitable Indian partners

  • Foreign companies will not be exempt from:

    • Social sector responsibilities

    • Participation in government insurance schemes

  • Assurance of strict regulatory oversight

  • Emphasis on:

    • Ease of living

    • Ease of doing business

Repealing and Amending Bill, 2025

Key provisions

  • Repeals 71 obsolete laws

  • Aims to:

    • Remove redundant colonial-era legislation

    • Correct drafting errors

    • Eliminate discriminatory provisions

Examples of Acts listed for repeal

  • Indian Tramways Act, 1886

  • Levy Sugar Price Equalisation Fund Act, 1976

  • Bharat Petroleum Corporation Limited (Determination of Conditions of Service of Employees) Act, 1988

  • General Clauses Act, 1897

  • Code of Civil Procedure, 1908

  • Indian Succession Act, 1925

Government’s rationale

  • Improves legal clarity

  • Reduces compliance burden

  • Part of broader legal and administrative reforms

  • Supports a shift away from a colonial legislative mindset

Prelims Practice MCQs

Q. With reference to the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, consider the following statements:

  1. It allows 100% foreign direct investment in the insurance sector.

  2. Foreign insurance companies are exempted from participating in government welfare schemes.

  3. Premiums collected from Indian policyholders are required to be retained within India.

Which of the statements given above are correct?
(a) 1 and 3 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

Answer: (a)



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