The Ministry of Finance (Department of Economic Affairs) has notified the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2026 (“ Rules ”) dated May 02, 2026 bearing Gazette ID CG-DL-E-02052026-272206 in the Gazette of India.
The Gazette notification is issued to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 notified dated October 17, 2019.
Key highlights of the Rules are as follows:
- The amendment Rules substitutes Entry F.8 of Schedule I of the Foreign Exchange Management (Non-debt instruments) Rules, 2019 to change the FDI limit through automatic route for insurance companies, LIC and Insurance Intermediaries.
- The Rules have allowed 100% Foreign Direct Investment (FDI) in Insurance Sector under automatic route except Life Insurance Corporation of India (LIC).
- FDI up to 20% is permitted in LIC through automatic route, subject to compliance with the LIC Act, 1956 and other applicable laws.
- Highlights for Insurance Companies are summarised as follows:
- The foreign investment up to 100% of total paid-up equity of the Indian Insurance Company (“Company”) is allowed post approval and verification by the Insurance Regulatory and Development Authority of India (“ IRDAI ”).
- Companies receiving FDI must comply with the Insurance Act, 1938 and obtain necessary IRDAI approvals/license for undertaking insurance and related activities.
- The Indian Insurance Companies having foreign investment, shall have at least one among the Chairperson of Board, Managing Director and Chief Executive Officer as a Resident Indian citizen and comply with the Indian Insurance Companies (Foreign Investment) Rules, 2015 and such rules from time to time.
- Foreign portfolio Investment shall be governed by Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and SEBI (Foreign Portfolio Investors) Regulations, 2019.
- Highlights for Insurance Intermediaries are summarised as follows:
- The foreign equity investment cap of 100% is permitted for all insurance intermediaries (brokers, reinsurance brokers, consultants, corporate agents, TPAs, surveyors, loss assessors, MGAs, insurance repositories, or as notified by IRDAI from time to time) on the same terms as insurers.
- If the Insurance Intermediary is a bank, whose primary business is outside insurance, then the FDI cap applicable in that sector shall continue to apply, also the bank shall maintain more than 50% of its revenue from non-insurance business in any financial year.
- Insurance intermediaries with majority foreign shareholding shall be incorporated as a limited company under the Companies Act, 2013. Also, one amongst the Chairman of Board, Chief Executive Officer, Principal Officer, Managing Director shall be a resident Indian citizen.
The key changes are presented in the table as follows:
| Sl. No. | Sector/Activity | Sectoral Cap | Entry Route |
|---|---|---|---|
| F.8.1 | Insurance Company | 100% | Automatic |
| F.8.2 | Life Insurance Corporation of India | 20% | Automatic |
| F.8.3 | Insurance Intermediaries including insurance brokers, re insurance brokers, insurance consultants, corporate agents, third party administrator, Surveyors and Loss Assessors, managing general agents, insurance repositories and such other entities, as may be notified by the Insurance Regulatory and Development Authority of India from time to time. | 100% | Automatic |
F.8.3.1 Other conditions applicable to Indian insurance companies and insurance intermediaries
- (a) The aggregate holdings by way of total foreign investment in the equity shares of an Indian Insurance Company by foreign investors, including portfolio investors, is permitted up to one hundred per cent. of the paid-up equity capital of such Indian Insurance company.
- (b) The foreign investment up to one hundred per cent. of the total paid-up equity of the Indian Insurance Company shall be allowed on the Automatic Route subject to approval and verification by the Insurance Regulatory and Development Authority of India.
- (c) Foreign investment in this sector shall be subject to compliance with the provisions of the Insurance Act, 1938(4 of 1938), and the condition that Companies receiving FDI shall obtain necessary licence or approval from the Insurance Regulatory and Development Authority of India for undertaking insurance and related activities.
- (d)(I) In an Indian Insurance Company having foreign investment, at least one among the Chairperson of its Board, its Managing Director and its Chief Executive Officer, shall be Resident Indian Citizens.
- (d)(II) An Indian Insurance company having foreign investment shall comply with the provisions under the Indian Insurance Companies (Foreign investment) Rules, 2015 and the applicable rules or regulations notified by the Department of Financial Services or Insurance Regulatory and Development Authority of India, from time to time.
- (e) Foreign portfolio investment in an Indian Insurance company shall be governed by the provisions contained in Chapter-IV, rule 10 and 11 read with Schedule II of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, and provisions of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019.
- (f) Any increase in foreign investment in an Indian Insurance company shall be in accordance with the pricing guidelines specified under these rules.
- (g) The foreign equity investment cap of hundred per cent. shall apply on the same terms as above to insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrator, Surveyors and Loss Assessors, managing general agents, insurance repositories and such other entities, as may be notified by the Insurance Regulatory and Development Authority of India from time to time.
- (h) The Foreign Direct Investment proposals shall be allowed under the Automatic Route subject to verification by the Authority and the foreign investment in insurance intermediaries shall be governed by the same terms as provided under rules 7 and 8 of the Indian Insurance Companies (Foreign Investment) Rules, 2015:
Provided that where an entity like a bank, whose primary business is outside the insurance area, is allowed by the Insurance Regulatory and Development Authority of India to function as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of such entities from their primary (i.e., non insurance related) business must remain above fifty per cent. of their total revenues in any financial year.
- (i) The insurance intermediary that has majority shareholding of foreign investors shall undertake the following:
- (i) be incorporated as a limited company under the provisions of the Companies Act, 2013(18 of 2013);
- (ii) at least one from among the Chairman of the Board of Directors or the Chief Executive Officer or Principal Officer or Managing Director of the insurance intermediary shall be a resident Indian citizen;
- (iii) shall bring in the latest technological, managerial and other skills; and
- (iv) shall make disclosures in the formats to be specified by the Authority of all payments made to its group or promoter or subsidiary or interconnected or associate entities;
- (j) The other conditions under the heading ‘Banking-Private Sector’ prescribed against Sl. No. F.2.1 shall be applicable in respect of bank promoted insurance companies.
- (k) The expressions ‘Equity Share Capital’, ‘Foreign Direct Investment’ (FDI), ‘Foreign Investors’, ‘Foreign Portfolio Investment’, ‘Indian Insurance Company’, ‘Indian Company’, ‘Non-resident Entity’, ‘Resident Indian Citizen’, ‘Total Foreign investment’ shall have the same meaning as provided in the relevant rules notified by the Department of Financial Services under the Insurance Act, 1938(4 of 1938) or in the regulations issued by Insurance Regulatory and Development Authority of India from time to time, in respect of foreign investment in Indian Insurance Companies and Insurance intermediaries.
F.8.3.2 Other conditions applicable to the Life Insurance Corporation of India (LIC):
- (a) Foreign investment in LIC shall be subject to compliance with the provisions of the Life Insurance Corporation Act, 1956 (31 of 1956), and such other provisions of the Insurance Act, 1938 (4 of 1938), as are applicable to LIC as per the provisions of section 43 of the Life Insurance Corporation Act, 1956 (31 of 1956).
- (b) Provisions of clauses (e) and (f) under Sl. No. F.8.3.1, shall also apply to LIC as if reference therein to an Indian Insurance Company is a reference to LIC.
- (c) The expressions referred to in clause (k) under Sl. No. F.8.3.1, shall have the meanings as respectively referred to them therein. Explanation. – For the purposes of this Sl. No., any reference to Indian insurance company or company referred to in clause (k) under Sl. No. F.8.3.1, shall be construed as a reference to LIC”.
The Rules are notified in furtherance of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 allowing 100% foreign investment in Indian Insurance Company.
A copy of the Rules is attached herewith for your ready reference.
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