India's government and main opposition party publicly support it. Foreign investors and many local businesses are also in favor.
Yet a plan to raise the foreign ownership cap for Indian insurance companies from 26 percent to 49 percent — a jump not even implying a transfer of control — has prompted an exhausting struggle among politicians and business leaders that shows how hard it will be for Prime Minister Narendra Modi to enact his promised economic reforms.
Mr Modi's ruling Bharatiya Janata party still hopes to push the Insurance Laws Amendment Bill through parliament this month in what would be the first significant legislative reform of the six-month-old government.
Among the beneficiaries that would be able to raise their stakes are the UK's Standard Life , which wants to list its joint venture with HDFC, and Mitsui Sumitomo and Nippon Life of Japan, whose partners are Max India and Anil Ambani's Reliance Group respectively. The law, the wording of which has yet to be finalized, is also expected to allow the entry of reinsurers and of Lloyd's of London, the insurance market.
The bill was first presented to lawmakers six years ago by a Congress-led government. But it has been held hostage by political point-scoring over unrelated issues — first by the BJP in opposition and now by other parties in the upper house of parliament — and stalled by protectionists in the industry reluctant to share a promising new market with foreign investors.
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The wording now being discussed would probably make a concession to Indian nationalists by requiring Indian management control — a restrictive move because under some of the existing joint venture shareholder agreements the operation is run by the minority foreign partner.
After waiting for years for access to India, some foreign investors in the sector would be frustrated if even the mildly reformist law on offer were blocked or further delayed.
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David Sloan of risk consultancy Eurasia Group said that if the informal "Bombay Club" of protectionist Indian businesses succeeded in mandating Indian management control, some foreign investors would not only forgo increasing their stakes — they might even withdraw altogether.
"This would be a disaster not only for increasing insurance penetration and boosting financial inclusion, it would be a significant setback for the government's efforts to attract long-term FDI," Mr Sloan said.
One senior executive at an Indian-foreign joint-venture insurer said: "I think it will be a massive embarrassment for the government if it doesn't happen in this [parliamentary] session . . . The longer it takes, the less confidence people have. They [foreigners] have put in money on the presumption that it will go to 49 percent."
Chris Cummings, chief executive of TheCityUK, which lobbies for London's financial center, said of India's insurance bill while on a visit to Mumbai last week: "It's important unto itself, and it's also totemic for the wider liberalization of the economy."
The life assurance, health and general insurance markets have huge potential for profitable expansion in one of the world's biggest and fastest-growing emerging markets — especially since 70 percent of the life market is currently in the hands of state-controlled Life Insurance.
In a study three years ago, Swiss Re noted that life coverage in India had grown more than tenfold in the decade to 2010 but that the country was exposed to a "protection gap" — the difference between required income after a breadwinner's death and the sum of savings and insurance cover — of $6.7 trillion.
Insurance executives and analysts say that while health insurance has been booming in India, the private sector life insurance business has been hit in the past few years by customer disappointment over earlier, mis-sold products and the effects of the 2008 financial crisis.
There are nevertheless eager potential investors as well as willing recipients in India hungry for capital and expertise.
"From the industry perspective, it will ease the capital strain," says Shashwat Sharma, a management consulting partner at KPMG in Mumbai. "If this [the law] goes through, I think $4 billion of fresh capital will come into the market."
A vibrant life insurance industry would boost domestic institutional investment in financial markets, still dominated by tycoons and their families. It would also help the government in its quest to fund billions of dollars of infrastructure projects, with the state seeking long-term money and life insurers hunting for currently unobtainable 30-year bonds in which to invest.
"It's a perfect asset-liability match," says Ravi Vishwanath, deputy chief executive of Tata AIA Life. "Anything that's done to increase that penetration [of life insurance] is good for the country. I'm confident the government will find a way to make it happen. The industry has waited a long time for this."