India Allows 100% FDI in Insurance Sector, Caps LIC Stake at 20%
Finance Ministry announces 100% FDI in insurance sector under automatic route; 20% cap for LIC
Mint
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The Finance Ministry of India has announced that 100% foreign direct investment (FDI) will be permitted in the insurance sector through the automatic route, with a specific cap of 20% for the Life Insurance Corporation (LIC). This change follows the enactment of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
- 01100% FDI allowed in the insurance sector via automatic route.
- 02Life Insurance Corporation (LIC) stake capped at 20%.
- 03Change follows the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
- 04Previous FDI limit was 74%.
- 05Official notification by DPIIT in February 2026.
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On Saturday, the Finance Ministry of India announced a significant policy change allowing 100% foreign direct investment (FDI) in the insurance sector through the automatic route. This decision is part of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which was passed by Parliament in December 2025 and raised the FDI cap from 74% to 100%. However, the Life Insurance Corporation (LIC) will have a stake limit set at 20%. The amendment received the President's approval and was enacted into law, with the Department for Promotion of Industry and Internal Trade (DPIIT) officially notifying this change in February 2026. This reform aims to enhance foreign investment in India's insurance sector, promoting greater competition and innovation.
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This policy change is expected to attract significant foreign investment into India's insurance sector, potentially leading to better services and products for consumers.
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