FM hails GST reforms as ‘huge victory'; hints at 100% FDI in insurance sector

Guwahati, Sept 14: Union Finance Minister Nirmala Sitharaman has hailed the latest Goods and Services Tax (GST) reforms as a “huge victory for each and every citizen of the country”, while also signalling that the Insurance Amendment Bill, proposing 100% foreign direct investment (FDI) in the sector, is likely to be tabled in the upcoming Winter Session of Parliament.

Speaking at a citizens’ forum event in Chennai on Sunday, Sitharaman said GST reforms would touch “every product from the start of the day till people go to bed”. She noted that the government had advanced implementation to September 22, well ahead of Prime Minister Narendra Modi’s directive to introduce them before Deepavali.

Highlighting the relief to consumers, she said that “99% of all goods earlier taxed at 12% have now been brought down to 5%.” The reforms, she added, reflect the Centre’s commitment to easing the tax burden and supporting citizens nationwide.

Later in the day, Sitharaman also said that she hope to introduce the Insurance Amendment Bill during the Winter Session, which usually begins in late November. The Bill seeks to raise the FDI limit in insurance companies from 74% to 100% as part of wider financial sector reforms.

The proposed legislation would amend key provisions of the Insurance Act 1938, alongside changes to the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999. It would also allow a reduction in paid-up capital requirements and enable the issue of composite licences.

“This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified,” Sitharaman earlier said in her Budget speech.

So far, the insurance sector has attracted Rs 82,000 crores through FDI. The move to fully open the sector to foreign players is expected to inject further capital and strengthen India’s financial services landscape.

The amendments to the LIC Act propose to empower its board to take operational decisions like branch expansion and recruitment.

Currently, there are 25 life insurance companies and 34 non-life or general insurance firms in India, including specialised general insurance companies like Agriculture Insurance Company of India Ltd and ECGC Ltd.

The FDI limit in the insurance sector was last raised from 49 per cent to 74 per cent  in 2021. In 2015, the government hiked the FDI cap in the insurance sector from 26 per cent to 49 per cent.

PTI