India’s insurance sector is now open to 100% FDI under the automatic route. The change has been operationalised through Press Note No. 1 (2026 Series), issued by the Department for Promotion of Industry and Internal Trade (DPIIT) on February 09, 2026. The Press Note has amended Paragraph 5.2.22 of the Consolidated FDI Policy to permit:

(i) 100% FDI under the automatic route in Indian insurance companies;

(ii) 100% FDI under the automatic route in insurance intermediaries, including brokers, reinsurance brokers, consultants, corporate agents, third party administrators, surveyors and loss assessors, managing general agents, insurance repositories and other entities as notified by IRDAI; and

(iii) 20% FDI under the automatic route in Life Insurance Corporation of India (LIC).

The amended FDI Policy clarifies that aggregate foreign investment (including foreign portfolio investment) is permitted up to 100% of the paid-up equity capital of an Indian insurance company under the automatic route, subject to verification by IRDAI. Foreign investment remains subject to compliance with the Insurance Act, 1938, the Indian Insurance Companies (Foreign Investment) Rules, 2015, and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. Companies receiving foreign investment are required to obtain the necessary licences and approvals from IRDAI.

Governance safeguards also continue to apply. In an Indian insurance company with foreign investment, at least one of the Chairperson of the Board, Managing Director, or Chief Executive Officer must be a resident Indian citizen. Similar governance measures have been prescribed for insurance intermediaries with a majority foreign ownership.

The reform represents a liberalisation of equity norms in the insurance sector, while maintaining regulatory oversight through IRDAI and FEMA compliance.

Credits: Kajal Tandon (Counsel) & Srishti Pandey (Associate)