Govt notifies 100% FDI in insurance sector; LIC cap kept at 20% – CNBC TV18

The government has formally notified 100% Foreign Direct Investment (FDI) in the insurance sector, allowing full foreign ownership in insurance companies and intermediaries under the automatic route, according to amendments to the Foreign Exchange Management rules.

As per the notification, foreign investment will now be permitted up to 100% in insurance companies and brokers, subject to compliance with regulations of the Insurance Regulatory and Development Authority of India (IRDAI). However, the cap for the Life Insurance Corporation of India remains unchanged at 20%.

Insurance Regulatory and Development Authority of India will continue to oversee licensing and regulatory approvals for entities receiving foreign investment.

The rules also introduce additional safeguards for investors linked to countries sharing land borders with India, including China and Hong Kong. While foreign firms with up to 10% Chinese or Hong Kong shareholding can invest under the automatic route, stricter scrutiny will apply based on beneficial ownership, replacing earlier norms that triggered approval even for minimal exposure.

The notification further clarifies that these relaxations will not apply to entities registered in China, Hong Kong, or other neighbouring countries sharing land borders with India.

The move follows the passage of the “Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025,” which raised the FDI limit from 74% to 100% to improve insurance penetration, attract capital, and enhance competition in the sector.

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