Notification no. S.O. 2186(E); Dated: 02.05.2026
The Central Government has notified the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2026. An amendment has been made to Schedule I of the existing rules. As per the amended norms, the FDI limit in the insurance sector has been increased from 74% to 100% under the automatic route, thereby allowing full foreign ownership. This move is expected to increase foreign participation in India’s insurance industry.
Accordingly, foreign investment in Indian insurance companies and intermediaries will now be allowed up to 100% of the total paid-up equity capital, including investments by portfolio investors. However, the full ownership under the automatic route will be permitted only after approval and verification by the Insurance Regulatory and Development Authority of India (IRDAI), as may be required from time to time.
Whereas, Life Insurance Corporation of India (LIC) will continue to remain under a separate framework, with foreign investment capped at 20% under the automatic route. The foreign investment in LIC must be subject to compliance with the provisions of the Life Insurance Corporation Act, 1956 and such other provisions of the Insurance Act, 1938, as apply to LIC under section 43 of the Life Insurance Corporation Act, 1956.
The conditions applicable to Indian insurance companies and insurance intermediaries are as follows:
(a) Foreign investment in the insurance sector must be subject to compliance with provisions of the Insurance Act, 1938 and the condition that companies receiving FDI must obtain the necessary license or approval from the IRDAI for undertaking insurance and related activities.
(b) In an Indian Insurance Company having foreign investment, at least one among the Chairperson of its Board, its Managing Director and its Chief Executive Officer must be a resident Indian Citizen. Also, an Indian Insurance Company with foreign investment must comply with the provisions of the Indian Insurance Companies (Foreign Investment) Rules, 2015, and the applicable rules or regulations notified by the Department of Financial Services or IRDAI.
(c) Foreign portfolio investment in an Indian Insurance Company must be governed by the provisions contained in Chapter IV, Rule 10 and 11, read with Schedule II of FEM (Non-debt Instruments) Rules, 2019, and the provisions of SEBI (FPI) Regulations, 2019.
(d) Any increase in foreign investment in an Indian Insurance Company must be in accordance with the pricing guidelines specified under these rules.
(e) The foreign equity investment cap of 100% must apply on the same terms to insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third-party administrators, Surveyors and Loss Assessors, managing general agents, insurance repositories and such other entities as may be notified by the IRDAI from time to time.
Further, FDI proposals must be allowed under the automatic route, subject to verification by the authority, and the foreign investment in insurance intermediaries must be governed by the same terms as provided under rules 7 and 8 of the Indian Insurance Companies (Foreign Investment) Rules, 2015.
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