According to ET Now, which cited agencies, the federal government on Saturday announced 100% FDI in insurance companies under the automatic method, permitting increased participation from foreign investors.
The Life Insurance Corporation of India (LIC) would continue to operate under a different structure, and the automatic route will limit foreign investment to 20%.In Press Note 1 (2026 Series), the Department for Promotion of Industry and Internal Trade stated that, subject to regulatory clearance and verification by the Insurance Regulatory and Development Authority of India (IRDAI), foreign investment, including that of portfolio investors in domestic insurance companies, will be allowed under the automatic route.

The policy change brings the foreign investment framework into compliance with the 2025 Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act. The finance ministry had previously announced that all of the law's provisions—aside from Section 25—would go into effect on February 5.
A minimum of one resident Indian citizen must hold the position of chairperson, managing director, or chief executive officer in insurance companies that receive foreign direct investment.
The Reserve Bank of India's pricing criteria under the Foreign Exchange Management Act (Fema) regulations must be followed for any increase in foreign holdings.Subject to IRDAI regulations, insurance intermediaries such as brokers, reinsurance brokers, corporate agents, third-party administrators, surveyors and damage assessors, managing general agents, and insurance repositories will also be subject to the 100% cap.
In the past, India accepted 20% FDI in state-run Life Insurance Corp. in 2022 and complete foreign ownership in insurance intermediaries in 2020.If non-insurance revenue surpasses 50% of total revenue in a fiscal year, organisations like banks functioning as insurance intermediaries will still be subject to the foreign investment restrictions that apply to their core industry. According to the corporations Act of 2013, intermediaries with a majority of foreign ownership must be constituted as limited corporations.