The government today notified 100 per cent foreign direct investment (FDI) in the insurance sector under the automatic route. With the notification, complete foreign ownership will now be allowed in the insurance companies barring Life Insurance Corporation (LIC).  

According to the notification issued by the ministry of finance, foreign investment in Life Insurance Corporation of India (LIC) is capped at 20 per cent. For all insurance companies, 100 per cent FDI is now permissible. This will also include intermediaries and brokers.

“The foreign investment up to one hundred per cent of the total paid-up equity of the Indian insurance company shall be allowed on the automatic route subject to approval and verification by the Insurance Regulatory and Development Authority of India,” finance ministry said in the notification. 

“The aggregate holdings by way of total foreign investment in the equity shares of an Indian insurance company by foreign investors, including portfolio investors, is permitted up to one hundred per cent of the paid-up equity capital of such Indian insurance company,” the notification said.

However, the notification also adds that an Indian insurance company having foreign investment must have at least one among the Chairperson of its board, its Managing Director, and its Chief Executive Officer, who shall be resident Indian citizens.

It may be noted that the Parliament had passed the Sabka Bima Sabki Raksha (amendment of insurance laws) Bill, 2025 in December last year, for hiking the FDI in the insurance sector to 100 per cent under the automatic route. FDI upto 74% was allowed earlier on automatic route. In February this year, the Department for Promotion of Industry and Internal Trade (DPIIT) notified 100% FDI in insurance.

In another notification issued today, the ministry of finance allowed overseas companies with Chinese shareholding of up to 10% to invest in India on automatic route with effect from May 1. Amendments to the effect has been made in the Foreign Exchange Management Act, mandating that companies with Chinese or Hong Kong shareholding of up to 10% will be allowed to invest in India in the sectors where FDI is permitted on automatic route. The investments will, however, be subject to sectoral conditions.