The Department for Promotion of Industry and Internal Trade has formally liberalised India’s insurance sector, permitting up to 100% foreign direct investment (FDI) under the automatic route, marking a significant shift in ownership policy for insurers operating in the country.
Under the revised framework, foreign investors will no longer require prior government approval to acquire full ownership of an Indian insurance company.
The move effectively removes the previous foreign investment cap and is expected to facilitate greater capital inflows, increased competition, and potential consolidation within the market.
International industry bodies have long anticipated the reform.
In March last year, the Global Federation of Insurance Associations (GFIA), which represents insurance associations worldwide, publicly backed India’s proposal to amend its Insurance Act in line with the changes now enacted, signalling strong global support for full liberalisation of the sector.
It is worth noting that regulatory safeguards accompany the liberalisation.
Namely, insurers must continue to comply with the Insurance Act, 1938 and associated foreign exchange regulations, while remaining subject to supervision by the Insurance Regulatory and Development Authority of India (IRDAI).
In addition, governance requirements remain in place, including a stipulation that at least one of the Chairperson, Managing Director, or Chief Executive Officer be a resident Indian citizen.
As Reinsurance News understands, the change thus aligns insurance with other sectors that have moved to automatic-route investment structures, while maintaining regulatory oversight and local accountability.
