Hyderabad, May 3: 100% FDI in insurance sector has been notified by the Centre under the automatic route, marking a major policy shift. The decision was announced by the Ministry of Finance through amended rules.
According to the notification, foreign investors can now hold full ownership in insurance companies and intermediaries. These include brokers and other related entities. However, the cap for Life Insurance Corporation remains at 20 percent.
100% FDI in insurance sector to boost investment
The move follows the passage of the Sabka Bima Sabki Raksha Bill by Parliament in December 2025. The law enabled the increase of the FDI limit from 74 percent to 100 percent.
After receiving Presidential assent, the Bill became law. Subsequently, in February 2026, the Department for Promotion of Industry and Internal Trade issued formal guidelines allowing full foreign investment in the sector.
Under the new rules framed through the Foreign Exchange Management Act, the automatic route eliminates the need for prior government approval. Therefore, foreign investors can directly invest in eligible insurance businesses.
Officials said the reform aims to attract higher foreign capital into the insurance sector. In addition, it seeks to improve penetration and expand coverage across the country. The government expects increased competition and better services as a result.
At the same time, policymakers retained restrictions on LIC to safeguard its strategic role. Analysts believe the change will strengthen the overall insurance ecosystem.
The 100% FDI in insurance sector policy marks a significant step in economic reforms. It aligns with the government’s broader push to ease investment norms and boost growth.
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