LIC rejects USTR claims of unfair advantage in Indian insurance market 

Life Insurance Corporation of India (LIC) has strongly refuted recent allegations by the United States Trade Representative (USTR) that it receives preferential treatment from the Indian government, the company responded today.

In its statement, LIC clarified that the statutory guarantee provided at its establishment in 1956 was designed to build public confidence during nationalisation and “has never been invoked or used as a marketing tool or provided any undue advantage.” The insurer emphasised that it operates in a fully competitive market alongside 24 private life insurance companies and is subject to the same regulatory oversight from IRDAI and SEBI as its competitors.

The rebuttal comes in response to the USTR’s 2025 National Trade Estimate Report, which claimed that “the Indian government’s explicit sovereign guarantee on every LIC policy results in customers choosing LIC over private insurers,” giving the state-owned company an “unfair competitive advantage.”

LIC attributed its market leadership to customer trust, service excellence, financial strength and transparency rather than government favoritism. The company serves over 30 crore customers across India and has operated for 69 years.

“LIC remains committed to upholding the highest standards of governance, service and customer trust,” said Siddhartha Mohanty, CEO and Managing Director of LIC.

The USTR report, published earlier this week, criticised various aspects of India’s financial sector, including barriers for foreign accounting firms, banks and payment service providers. It noted that foreign banks account for less than 0.6 per cent of total bank branches in India and face “non-transparent limitations” on expansion.

The report acknowledged India’s 2025 Union Budget announcement to raise the foreign direct investment cap on the insurance sector from 74 per cent to 100 per cent as “progress” but expressed concerns about safeguards requiring a majority of board members to be Indian residents.

This dispute emerges amid escalating trade tensions, as the US announced 26 per cent tariffs on all Indian exports on Thursday. President Donald Trump justified the measures by claiming India has “not been treating us right,” citing India’s 52 per cent tariffs on certain US goods.

The shares of Life Insurance Corporation of India were trading at ₹801.35 down by ₹13.95 or 1.71 per cent on the NSE today at 11.15 am.

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Published on April 4, 2025