Investing in India’s Insurance Sector: Frequently Asked Questions

The Insurance Companies (Foreign Investment) Amendment Rules, 2025, notified December 30, 2025, update India’s foreign investment framework for insurance companies by aligning FDI definitions with FEMA Non-Debt Instruments Rules, revising ownership thresholds, strengthening governance requirements, and removing select legacy compliance provisions.

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These follow a stakeholder consultation process that took place from August 29, 2025 to September 12, 2025 and the Indian parliament passing the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 on December 17, 2025.

Given this development, we address some commonly asked questions about scope for foreign investment in India’s insurance sector.

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FAQs: Investing in India’s insurance sector

Has India removed the 74 percent foreign ownership cap in insurance?

Yes. The fixed 74 percent cap has been removed from the Foreign Investment Rules. Foreign ownership is now linked directly to limits stipulated under the Insurance Act, 1938, enabling future changes without separate rule amendments.

Can foreign investors own 100 percent of an Indian insurance company?

Following passage of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, India permits up to 100 percent FDI in insurance companies, subject to regulatory conditions and compliance with applicable investment and governance requirements.

Do Foreign Venture Capital Investors (FVCIs) qualify as FDI under the new rules?

Yes. The amended framework explicitly includes FVCI investments within the definition of Foreign Direct Investment, providing greater clarity for alternative and institutional investors.

What governance changes apply to foreign-invested insurance companies?

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At least one of the following must be a Resident Indian Citizen:

• Chief Executive Officer
• Managing Director
• Chairperson of the Board

This requirement reinforces local leadership and regulatory accountability.

How do the amendments affect reinsurance companies?

The Net Owned Fund requirement for foreign reinsurance branches has been reduced from INR 50 billion to INR 10 billion, lowering entry barriers for global reinsurers.

When did the amended insurance companies rules come into effect?

The Insurance Companies (Foreign Investment) Amendment Rules, 2025 became effective immediately upon publication in the Official Gazette on December 30, 2025.

What should foreign insurers consider before entering the Indian market?

Key considerations include:

• Ownership structuring under the updated FDI framework
• Board and executive localization planning
• Licensing and regulatory approvals
• Tax and capital deployment strategy
• Long-term compliance and operational setup

Early regulatory planning is critical to avoid delays during scale-up.

How can Dezan Shira & Associates help?

Dezan Shira & Associates supports insurers and financial services firms with market entry strategy, entity structuring, regulatory advisory, governance planning, and ongoing compliance across India and Asia. Reach our experts here: india@dezshira.com

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