The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (“Insurance Amendment Act”) had inter alia amended the Insurance Act, 1938 to increase the limit for foreign investment (“FDI Limit”) in Indian insurance companies from 74% to 100%. As mentioned in our previous alert on the Insurance Amendment Act, the increase in the FDI limit required necessary amendments to the foreign exchange control rules in order to be implemented.

On 2 May 2026, the Central Government enacted the Foreign Exchange Management (Non-Debt Instruments) (Second Amendment) Rules, 2026, which has (i) increased the FDI Limit in insurance companies to 100%; (ii) removed the requirement for an insurance company with FDI to have resident Indian citizens constitute a majority of its directors and key management persons; (iii) removed the requirement for insurance intermediaries to obtain prior IRDAI approval to repatriate dividend; and (iv) removed the restriction on payments by insurance intermediaries to the foreign group, promoter, subsidiary, interconnected or associate entities beyond what is necessary or permitted by the IRDAI.

To fully effectuate the amendments under the Insurance Amendment Act, further modifications to the subordinate regulatory framework are awaited, including to the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Indian Insurance Companies) Regulations, 2024, and the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024.

Authors; Deepa Christopher – Partner and Pranav Kandada – Associate

Disclaimer: This alert only highlights key issues and is not intended to be comprehensive. The contents of this publication do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this publication should be considered an advertisement or solicitation of TT&A’s professional services.