New Delhi. The Finance Ministry on Saturday notified 100 per cent foreign direct investment (FDI) in the insurance sector under the automatic route, replacing the previous cap of 74 per cent.
The Finance Ministry has issued a notification for 100 percent FDI in the insurance sector under the automatic route on May 2, 2026, which replaces the previous limit of 74 percent.
This rule has come under the Sabka Bima Sabki Raksha (Insurance Laws Amendment) Bill-2025, the objective of which is to bring foreign capital, technology and better products. However, for LIC this limit will remain only 20 percent.
According to the notification, as per the Foreign Exchange Management (Non-Debt Instruments) (Second Amendment) Rules-2026, 100 per cent foreign investment will be allowed under the automatic route in intermediaries including insurance companies and brokers. At the same time, for the public sector insurance company Life Insurance Corporation of India (LIC), this limit has been fixed at 20 percent.
It is noteworthy that the Parliament had passed the Sabka Bima Sabki Raksha (Insurance Laws Amendment) Bill-2025 in December 2025. This has paved the way for increasing the FDI limit in the insurance sector from the earlier 74 per cent to 100 per cent under the automatic route.
After getting the approval of the President, this bill became law. After this, in February 2026, the Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry had notified 100 percent FDI in the insurance sector.
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