On 30-12-2025, the Ministry of Finance notified the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025, to align foreign investment norms in the insurance sector with updated regulatory frameworks.
These Amendment Rules came into force on 30-12-2025.
Key Points:
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The Rules amend the Indian Insurance Companies (Foreign Investment) Rules, 2015 to ensure compliance under with the Insurance Act, 1938 and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
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The definition of Foreign Direct Investment (FDI) has been expanded to include investments by non-resident entities or persons outside India in equity shares of Indian insurance companies under the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
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Investments by Foreign Venture Capital Investors (‘FVCI’) are also included under permissible FDI.
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References to “FEMA Regulation 2000” have been replaced with “Foreign Exchange Management (Non-Debt Instruments) Rules, 2019”, in clauses (g) and (h), ensuring consistency with current legal frameworks.
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The term “Total Foreign Investment” has been replaced with Foreign Direct Investment in Rule 3.
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The previous cap of 74% on foreign investment in Indian insurance companies cannot exceed the percentage stipulated under the Insurance Act, 1938, allowing flexibility for future changes.
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Rule 4 now requires at least one key managerial position, CEO, Managing Director, or Chairperson, to be held by a Resident Indian Citizen in companies with foreign investment.
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These Amendments aim to modernize foreign investment norms, strengthen governance, and align the insurance sector with contemporary financial regulations.