In an official notification issued on Saturday, the Finance Ministry has made provisions whereby 100% FDI can be made in the insurance industry through the automatic route. Under the Foreign Exchange Management (FEMA) Rules, 2026, the government will allow 100% foreign investments in insurance businesses and intermediaries of insurance companies like brokers and underwriters, except the Life Insurance Corporation of India where the limit will stay 20%.

In December 2025, Parliament enacted the Sabka Bima Sabki Raksha Bill, 2025, which raised the FDI limit from 74% to 100% in the insurance business through the automatic route. Once the President accorded his assent to the bill, it became an act. Subsequently, in February 2026, the Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, notified 100% foreign direct investment (FDI) in the insurance sector. Now, with this decision notified, it will be easier for foreign investors to invest in Indian insurance companies.

India's insurance sector is one of the fastest-growing sectors in the world. It ranks 10th globally and has an annual growth rate of approximately 15-20%. Increased awareness, adoption of digital technology, and the FDI limit, which was previously capped at 74%, have led to rapid growth in the sector. Now, with the foreign investment limit raised to 100%, this growth is expected to accelerate further. Governed by the insurance regulator IRDAI, the sector currently comprises over 57 companies, with the state-owned insurance company LIC holding a significant stake. However, the private sector's market share is also steadily increasing.