The Department of Financial Services, Ministry of Finance has published a draft of the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025 (‘Draft Amendment’) on August 29, 2025, to amend the Indian Insurance Companies (Foreign Investment) Rules, 2015 (‘Foreign Investment Rules’).

In furtherance of the announcement during the Budget Session of the Parliament in February 2025, the Draft Amendment facilitates 100% foreign investment in the insurance sector under the automatic route and aims to ease the conditionalities applicable to insurance companies in India having foreign investment. The key features of the Draft Amendment are:

i.    Foreign Investment Proposals: The Draft Amendment provides that the foreign investment threshold will be as stipulated under the Insurance Act, 1938 (‘Act’) (replacing the 74% threshold previously provided in the Foreign Investment Rules). The Act has already been amended to permit foreign investment up to 100% in the insurance sector.

ii.   Majority Directors and Key Management Persons as Resident Indian Citizens: The requirement in the Foreign Investment Rules to appoint resident Indian citizens as majority of directors and majority of key management persons of the insurance company receiving foreign investment is proposed to be deleted. The requirement to appoint a resident Indian citizen as either the chairperson, Managing Director (‘MD’) or Chief Executive Officer (CEO) will continue to apply to an insurance company which has received foreign investment.

iii.  Minimum Number of Independent Directors: Insurance companies with foreign investment of more than 49% were required to have (a) at least 50% directors as independent directors; or (b) an independent director as chairperson of the board with at least one- third of the board comprising of independent directors. This requirement is proposed to be deleted.

iv.   Relaxed Conditionalities for Insurance Intermediaries: Certain conditionalities applicable to insurance intermediaries with majority foreign shareholding (such as appointing a resident Indian citizen as either the chairman, principal officer or MD of the insurance intermediary, requiring prior permission of the Insurance Regulatory and Development Authority of India (‘IRDAI’) for repatriation of dividend, and restrictions on payments to foreign group, promoter, subsidiary or interconnected entities beyond what is permitted by IRDAI) are proposed to be deleted.

The Draft Amendment has been published for information of the public and for seeking objections and suggestions. The rules will be taken up for publication in the Official Gazette upon expiry of 15 days from the date of publication (i.e., by September 13, 2025).