The union government has approved the proposal to increase FDI limit in insurance sector to 49 percent. FDI limit in insurance sector is currently 26 percent. The government took decision on the matter in the recent meting of union cabinet. It would introduce a bill in parliament in the forthcoming session to effect this change. However, the bill is unlikely to pass due to lack of time and opposition of the communist parties.

Union finance minister, P Chidambaram said that the government would introduce Insurance (Amendment) Bill, 2008 to amend the Insurance Act 1938, General Insurance Business (Nationalization) Act, 1972 and Insurance Regulatory and Development Act, 1999. The government would introduce it in the upper house of parliament as it is not a money bill.

The government would also introduce Life Insurance Corporation (Amendment) Bill in the Lok Sabha. It is aimed to increase equity base of LIC from current Rs 5 crore to Rs 100 crore. Interestingly, LIC is not covered under IRDA Act due to special provisions while other insurers have to maintain minimum paid-up capital of Rs 100 crore as per the IRDA Act. The bill is again unlikely to pass due to lack of time.