The Central Government on Saturday (May 2) has approved 100% Foreign Direct Investment i.e. FDI in the insurance sector. Now foreign investors will be able to take full stake in Indian insurance companies through the automatic route, although the investment limit for LIC has been retained at 20% only. What are the conditions for insurance companies? According to the government notification, foreign investment in the insurance sector will be subject to the provisions of the Insurance Act-1938. It will be mandatory for the investee companies to obtain necessary licenses or approvals from the Insurance Regulatory and Development Authority (IRDAI) for insurance and related activities. Along with this, it has also been made clear in the rules that at least one of the chairperson, managing director (MD) or chief executive officer (CEO) of the board of the Indian insurance company in which there will be foreign investment should be an Indian citizen. Separate rules for LIC and 20% limit. Insurance intermediaries also got the benefit. The bill was passed in December. The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry had given information in this regard in February itself. Earlier in December 2025, Parliament had passed the ‘Sabka Bima Sabka Raksha (Insurance Laws Amendment) Bill, 2025’. Through this law, necessary changes have been made in three major laws related to the insurance sector – Insurance Act 1938, LIC Act 1956 and IRDAI Act 1999. Easing of rules for border countries The government in March also eased the rules for FDI coming from countries sharing land borders with India. The Cabinet has amended the ‘Press Note 3’ framework. Now investment of up to 10% non-controlling stake from border countries will not require prior approval of the government, it will come under the automatic route. What is automatic route? In this, foreign investors do not need to take prior permission from the government or RBI before investing. What is Press Note 3? This rule regulates investments from countries that share borders with India (e.g. China, Pakistan), to ensure investment security. Read this news… Investment in India is easy for neighboring countries including China: Foreign investment rules changed; The central government has relaxed the rules for Foreign Direct Investment (FDI) coming from neighboring countries that share borders with India, including China. In the cabinet meeting chaired by PM Modi on Tuesday (March 10), changes in the rules of Press Note 3 i.e. FDI policy were approved. Read the full news…
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Government approves 100% FDI in insurance sector: Paves the way for foreign investment through automatic route; The limit in LIC will remain only 20%
