100% Foreign Investment in India's Insurance Sector
The Indian government has announced a new policy allowing 100% foreign investment in the insurance sector, enabling foreign companies to fully invest without local partnerships. This change impacts LIC and other insurance firms across India.
NEWS
The Finance Ministry on Saturday issued a notification allowing 100 per cent foreign investment in the insurance sector under the automatic route. Earlier, the Sab Ka Bima Sab Ki Raksha (Insurance Laws Amendment) Bill, 2025 was passed in Parliament in December 2025, under which the limit of foreign investment in the insurance sector under the automatic route was increased from 74 per cent to 100 per cent. This bill became a law after receiving the assent of President Draupadi Murmu....
After that, DPIIT notified 100 percent FDI in the insurance sector in February 2026.
The Department of Promotion of Industry and Internal Trade (DPIIT) said that foreign investment, including portfolio investment, will be automatically allowed under the regulatory approval of the Insurance Regulatory and Development Authority of India (IRDAI). However, the government has set a limit of 20 percent for state-owned insurance company LIC. That is, no foreign company will be able to invest more than 20 percent in LIC.
This decision has been taken to ensure that control of LIC does not pass to any other country or company.
This policy change has been made under the Insurance Laws (Amendment) Act, 2025, which aims to increase insurance coverage and strengthen the capital base of the sector. This step by the central government will remove barriers to entry of foreign companies in the insurance sector and increase capital. However, foreign companies will have to follow some government regulations
In order to ensure regulatory oversight and domestic control, foreign-invested insurance companies are required to appoint at least one Indian resident as Chairman, Managing Director or CEO.
Apart from this, any increase in foreign shareholders will have to follow the guidelines of the Reserve Bank of India under the FEMA rules. The 100 per cent foreign direct investment (FDI) limit also applies to brokers, reinsurance brokers, corporate agents, third parties, grand agents and insurance brokers. However, they must comply with the IRDAI norms, sources said.