MoF amends FEMA rules — 100% FDI in insurance via automatic route (LIC cap retained)

What: Ministry of Finance amended FEMA (Non‑debt Instruments) Rules to allow 100% FDI in insurance companies and intermediaries via automatic route; LIC cap remains 20% under automatic route.

Eligible entities: Insurance brokers, reinsurance brokers, consultants, corporate agents, TPAs, surveyors & loss assessors, etc.

Significance:

• Market opening: Eases foreign capital inflow, could boost capital, distribution and product innovation in insurance.

• Regulatory balance: LIC cap retained; sector still subject to Insurance Act and regulatory approvals.

UPSC relevance: FDI policy, financial sector regulation, economic reforms.

Practice Q: Analyse the potential benefits and risks of allowing 100% FDI in India’s insurance sector.