According to the notification, foreign investment is now permitted up to 100% in insurance firms and brokers, contingent on adherence to the regulations set forth by the Insurance Regulatory and Development Authority of India (IRDAI). Nevertheless, the limit for the Life Insurance Corporation of India remains fixed at 20%.
The Insurance Regulatory and Development Authority of India will maintain oversight of licensing and regulatory approvals for entities accepting foreign investment.
The regulations also incorporate enhanced safeguards for investors associated with countries that share land borders with India, including China and Hong Kong. While foreign companies with up to 10% stake from Chinese or Hong Kong sources can invest under the automatic route, stricter scrutiny will be enforced based on beneficial ownership, replacing earlier standards that necessitated approval for even minimal exposure.
The notification further specifies that these relaxations will not be applicable to entities registered in China, Hong Kong, or other neighboring countries sharing land borders with India.
This initiative follows the enactment of the “Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025,” which increased the FDI cap from 74% to 100% to enhance insurance penetration, attract investment, and boost competition within the sector.
