Govt notifies 100% FDI in insurance sector under automatic route rules

May 2, 2026

The move to allow 100 per cent FDI in the insurance sector is expected to boost foreign interest in the sector

The Ministry of Finance on Saturday notified 100 per cent foreign direct investment (FDI) in the insurance sector under the automatic route, which allows complete foreign ownership. Foreign investment in Life Insurance Corporation of India (LIC) is capped at 20 per cent, and for insurance intermediaries it stands at 100 per cent.

In its notification, the Finance Ministry said that, “The foreign investment up to one hundred per cent of the total paid-up equity of the Indian insurance company shall be allowed on the automatic route subject to approval and verification by the Insurance Regulatory and Development Authority of India.”

The move comes after Parliament gave its nod to Sabka Bima Sabki Raksha Bill, 2025, in December 2025, which increased the limit on foreign investment to 100 per cent from the existing 74 per cent under the automatic route. Later, the Bill also received the President’s assent.

“The aggregate holdings by way of total foreign investment in the equity shares of an Indian insurance company by foreign investors, including portfolio investors, is permitted up to one hundred per cent of the paid-up equity capital of such Indian insurance company,” the notification said.

However, the notification also adds that an Indian insurance company having foreign investment must have at least one among the Chairperson of its board, its Managing Director, and its Chief Executive Officer, who shall be resident Indian citizens.

The government had allowed 100 per cent FDI for insurance intermediaries and 20 per cent FDI in LIC in 2020. The foreign inflows into LIC shall be subject to compliance with the provisions of the Life Insurance Corporation Act.

The move to allow 100 per cent FDI in the insurance sector is expected to boost foreign interest in the sector.

[The Business Standard]