The central government has permitted 100% foreign direct investment (FDI) in the insurance sector under the automatic route, allowing foreign companies to acquire full ownership in Indian insurance companies. However, the FDI limit for Life Insurance Corporation of India (LIC) remains capped at 20%.
According to the government notification, foreign investors will not require prior approval from the government or the Reserve Bank of India to invest under the automatic route. Companies receiving such investments must obtain necessary licenses and approvals from the Insurance Regulatory and Development Authority of India (IRDAI) and comply with the provisions of the Insurance Act, 1938.
Conditions have been imposed to ensure Indian control and oversight. Under the revised framework, at least one of the Chairperson, Managing Director (MD), or Chief Executive Officer (CEO) of the insurance company must be an Indian citizen. This requirement is aimed at maintaining regulatory balance and national oversight.
Life Insurance Corporation of India has been kept outside the scope of the revised FDI limit. Investments in LIC will continue to be governed by the Life Insurance Corporation of India Act, 1956 and the Insurance Act, 1938, with the foreign investment cap unchanged at 20%.
The policy change also extends to insurance intermediaries, which are now allowed 100% foreign investment. These include insurance brokers, reinsurance brokers, insurance consultants, corporate agents, and third-party administrators. Entities such as surveyors, loss assessors, managing general agents, and insurance repositories are also covered under the revised policy.
The foundation for this policy shift was laid in December 2025, when Parliament approved the ‘Sabka Bima, Sabki Raksha (Insurance Laws Amendment) Bill, 2025’. The legislation amended three key laws: the Insurance Act, 1938, the Life Insurance Corporation of India Act, 1956, and the Insurance Regulatory and Development Authority of India Act, 1999.
Separately, the government has eased investment norms for countries sharing land borders with India. The Cabinet has amended the Press Note 3 framework to allow non-controlling investments of up to 10% under the automatic route. Previously, all investments from such countries required prior government approval.
Press Note 3, introduced in 2020, was designed to regulate investments from countries sharing land borders with India, with a focus on national security and preventing foreign control in sensitive sectors.
