Govt Notifies Draft Rules on FDI in Indian Insurance Companies (2025)

The Finance Ministry has recently issued a notification making the way for the quick implementation of 100% foreign investment in the insurance sector.

According to the notification, the Indian Insurance Companies (Foreign Investment) Amendment Rules 2025 seek to replace the existing limit of 74% foreign investment as specified by the Insurance Act, 1938.

The notice is given that the said draft rules will be taken for publication in the Gazette of India after the expiry of a time of fifteen days from the date on which the copies of the draft rules are made available to the public.

Below are the Draft Rules:

1. Short title and commencement

• These rules will be known as the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025.
• These rules will come into effect from the date of their publication in the official Gazette.

2. In the Indian Insurance Companies (Foreign Investment) Rules, 2015, all rules related to Foreign Exchange Management Regulation, 2000 will be replaced with Foreign Exchange Management Rules, 2019, and all rules related to FEMA Regulation 2000 will be replaced with FEMA (NDI) Rules.

3. In the principal rules, in Rule 2 (1)

• The words, brackets and figures “clause (i) (1) of regulation 5 of” and the word and letter ‘Regulation 6 of” will be removed in clause (f).
• The words, brackets and figures ‘sub-regulation (2), (2A), (3) and (8) of regulation 5 of‘ will be removed.

4. The words ‘to exceed seventy-four per cent of the paid-up equity capital of such Indian Insurance Company’ will be replaced with the words ‘to exceed the limit as specified by the Insurance Act, 1938’ In the principal rules.

5. In the principal rules, Rule 4 (sub-rule (1))

• Clause (a) will be removed.
• Clause (b) will be removed.
• Explanation will also be removed.

6. In the principal rules, Rule 4 (sub-rule (2)) will be removed.

7. In the principal rules, Rule 4A will be removed as well.

8. In the principal rules, rule 5 will be replaced with the following:-

“5. The Foreign Investment proposals of the Indian Insurance Company will be permitted on the automatic route for the paid-up equity capital as specified by the Insurance Act, 1938 condition to verification by the Insurance Regulatory and Development Authority of India.”

9. In the principal rules, Rule 7, the words, brackets and figures ‘sub-regulation (2), (2A), (3) and (8) of regulation 5 of‘ will be removed.

10. In the principal rules, in Rule (9) (3) clause (ii), (iii), (v) and (vii) will also be removed.

For complete details, refer to the notification mentioned below