The Indian government has allowed 100% FDI in domestic insurance companies under the automatic route, while retaining a 20% foreign investment cap for LICI, subject to IRDAI regulations.
The government of India has notified 100% FDI in domestic insurance companies under the automatic route, allowing increased participation by foreign investors, while retaining a separate limit of 20% for the public sector life insurer, Life Insurance Corporation of India (LICI)
The decision was announced through Press Note 1 (2026 Series) issued by the Department for Promotion of Industry and Internal Trade. It permits foreign investment, including by portfolio investors, in Indian insurance firms without prior government approval, subject to regulatory clearance. The move aims to streamline the investment process by placing it under the automatic route rather than requiring case by case approval. The Insurance Regulatory and Development Authority of India (IRDAI) will oversee verification and compliance for such investments.
LICI will continue to operate under a different framework, with foreign investment capped at 20% under the automatic route. This maintains an existing distinction between LICI and other insurance companies in terms of foreign ownership.