The Government of India has notified 100 per cent foreign direct investment (FDI) in insurance companies under the automatic route, enabling broader participation by overseas investors, according to reports citing official sources.
Under the revised framework, the Life Insurance Corporation of India (LIC) will continue to operate under a separate regime, with foreign investment capped at 20 per cent under the automatic route.
The Department for Promotion of Industry and Internal Trade (DPIIT), through Press Note 1 (2026 Series), stated that foreign investment, including portfolio investment in domestic insurance companies, will now be permitted under the automatic route. However, such investments will remain subject to regulatory approval and verification by the Insurance Regulatory and Development Authority of India (IRDAI).
The policy amendment aligns the foreign investment structure with the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025. The Ministry of Finance had earlier notified that the provisions of the Act, excluding Section 25, would come into effect from 5 February.
Any increase in foreign shareholding must comply with pricing guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act (FEMA) regulations.
The revised rules also extend the 100 per cent foreign investment allowance to insurance intermediaries. These include insurance brokers, reinsurance brokers, corporate agents, third-party administrators, surveyors and loss assessors, managing general agents, and insurance repositories, all subject to IRDAI regulations.
India had previously permitted full foreign ownership in insurance intermediaries in 2020. In 2022, the country also raised the FDI limit in LIC to 20 per cent.
Entities such as banks acting as insurance intermediaries will continue to be governed by the foreign investment limits applicable to their principal sector, provided that non-insurance revenue accounts for more than 50 per cent of total annual income. Additionally, insurance intermediaries with majority foreign ownership must be incorporated as limited companies under the Companies Act, 2013.
The key provisions of the revised FDI framework are summarised below:
| Area | Provision |
|---|---|
| Insurance companies | 100% FDI under automatic route |
| Life Insurance Corporation of India (LIC) | 20% FDI cap under automatic route |
| Insurance intermediaries | 100% FDI permitted under IRDAI norms |
| Approval mechanism | Automatic route with regulatory clearance |
| Regulatory authority | Insurance Regulatory and Development Authority of India (IRDAI) |
| Pricing compliance | Reserve Bank of India FEMA guidelines |
| Corporate structure requirement | Limited company under Companies Act, 2013 for majority foreign-owned intermediaries |
The notification represents a significant change in India’s insurance sector investment policy framework, expanding the scope for foreign participation while maintaining regulatory oversight through established financial and insurance sector authorities.