India sells 6.5% LIC stake for $3.3 billion as divestment drive accelerates

India completed the sale of a 6.5% stake in Life Insurance Corporation of India, raising $3.3 billion in one of its biggest divestment transactions as the government steps up stake sales in state-owned companies to shore up finances. The discounted offering was priced at a 10% discount to attract buyers and was oversubscribed, extending a broader push that has seen the state pare holdings in 10 public sector companies this year and raise more than 620 billion rupees ($6.5 billion). Excluding LIC, India has sold stakes in nine state-owned firms in 2026 and raised nearly 270 billion rupees ($2.8 billion), the highest in more than 10 years, according to Prime Database. Companies sold this year include Cochin Shipyard, Indian Railways Finance Corp, NHPC and Coal India. The government is now more than 65% of the way toward its annual disinvestment target of 800 billion rupees ($8.4 billion). The faster pace of divestment comes as India confronts widening fiscal pressures. Economists said stake-sale proceeds provide useful non-debt revenue at a time when subsidy costs are rising, capital spending has not been cut back, and foreign capital outflows have contributed to currency weakness and tighter domestic financial conditions. India's goods and services trade deficit stood at $37.4 billion in the quarter ending June, while its fiscal deficit at the end of June was 3.1 trillion rupees, or 18.2% of the budget estimate for the financial year ending March 2027. The LIC sale also advances the government's effort to reduce its holding in the insurer and move toward the 10% minimum public shareholding requirement set by the Securities and Exchange Board of India ahead of the May 16, 2027 deadline.