Centre Amends Insurance Foreign Investment Rules, Removes ‘Total Foreign Investment’ Concept [Read Notification]

The Department of Financial Services has issued Notification No. G.S.R. 928(E) on 30 December 2025, amending the Indian Insurance Companies (Foreign Investment) Rules, 2015.

This notification updates how foreign investment in Indian insurance companies is defined, controlled, and checked. The notification was published in the Gazette of India and finalises changes that were first suggested in August 2025.

After getting comments and objections from the public, the government has now made these final rules, which started working from the date they were published. The changes are meant to match the insurance sector rules with the latest foreign exchange laws and the Insurance Act, 1938. They make definitions simpler, remove old mentions, and make clear the limits on foreign investment and management needs.

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Now, Foreign Direct Investment (FDI) is clearly defined as money put in by non-residents in the shares of Indian insurance companies under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. It also includes investments by Foreign Venture Capital Investors (FVCIs) where allowed.

Old mentions of FEMA Regulations, 2000 have been changed to the FEMA Non-debt Instruments Rules, 2019, to keep everything in line with current foreign exchange rules.

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The idea of “Total Foreign Investment” has been taken out and replaced with “Foreign Direct Investment” to stop any mix-up between direct and indirect foreign money.

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Instead of a fixed percentage, the rules now say foreign investment in insurance companies can go up to the limit given in the Insurance Act, 1938, and any future changes to it.

In insurance companies that have foreign investment, it is now required that at least one of the Chairperson of the Board, Managing Director, or Chief Executive Officer must be a resident Indian citizen. Some reporting and compliance rules have been removed to make things easier and reduce the load on insurance companies.

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