New Delhi, Dec 12 (UNI) The union Cabinet has approved a major change in India’s insurance regulations by clearing the proposal to allow100 per cent foreign direct investment in insurance companies.
The decision is part of the Insurance Amendment Bill, 2025, which will be introduced in Parliament during the ongoing session.
The approval lifts the existing 74 per cent cap on foreign ownership and opens the sector to complete foreign control under regulatory supervision.
The reform aims to expand capital availability for insurers, support balance-sheet strength, and increase the sector’s capacity to handle India’s growing demand for life, health and non-life insurance products.
The new framework enables fully foreign-owned insurers to operate in India, subject to compliance with solvency norms, investment rules and policyholder protection standards. The measure is expected to encourage technology-driven expansion, product diversification and stronger risk management practices.
India’s insurance penetration remains lower than global averages, and the government has been working on expanding the sector’s reach. Higher foreign investment is expected to improve capital formation, support penetration in underserved markets, and enable companies to scale their distribution networks.
Following the announcement, insurance stocks recorded sharp gains, with several public sector insurers rising significantly in intraday trading. The markets responded to expectations of increased foreign capital inflow, potential restructuring, and stronger financial positions for domestic insurers.
The decision forms part of a wider set of reforms considered by the Cabinet to open high-growth sectors to global participation. After parliamentary approval, the amended law will allow full foreign ownership across insurance companies, reinsurers and intermediaries operating in the country.
Detailed operational guidelines will be issued once the legislative process is completed, paving the way for foreign insurers to increase their investments and expand operations under the updated regulatory system.
