FDI in the Indian Insurance Sector

After almost seven years, a much awaited liberalisation of the Indian insurance sector has been effected after the Insurance Laws (Amendment Bill) 2015 was passed by both Indian houses of Parliament in March. Amongst other things, the Insurance Bill raises the total foreign investment limit in the insurance sector from 26 per cent. to 49 per cent, allows Indian insurance companies to raise capital through financial instruments other than equity shares and makes it possible for foreign reinsurance companies to undertake re-insurance business in India directly through the establishment and registration of an Indian branch. The passing of the Insurance Bill has also ended uncertainty around the enforceability of the Insurance Laws (Amendment) Ordinance 2014 which came into effect on 26 December 2014 and was always meant to be a stop-gap measure.

In addition to the increase in foreign direct investment limits, the ability to raise financing other than by equity and the opening up of the re-insurance market are all positive signs that we see leading to further investment in the insurance sector in India.

Linklaters has issued a newsletter on this topic which can be found here.

For further information please contact Savi Hebbur, Partner (tel. +44 20 7456 3388) or Sushil Jacob, Counsel (tel: +44 20 7456 2031) at Linklaters, or Kunal Thakore, Partner (tel. +91 22 6613 6961) or Deepa Christopher, Managing Associate (tel. +91 22 6613 6943) at TT&A, a “best friend firm” of Linklaters.