Key takeaways

• On March 12, 2015, the increase in foreign equity ownership limitation to 49% from 26% in Indian insurance firms was confirmed as law by India’s parliament. The Insurance Laws (Amendment) Bill, 2015 ended the uncertainty around the recently-promulgated presidential ordinance that brought in this change.
• Foreign investment of up to 26% will be able to be reached without any prior government approval, while any investment above 26% and up to the cap of 49% will require prior government approval from the Foreign Investment Promotion Board of the Government of India. “Ownership” and “control” of the investee company must remain with Indian residents.
• In addition, to provide the necessary framework and clarity for foreign investment in the Indian insurance sector, the government also recently published the Indian Insurance Companies (Foreign Investment) Rules, 2015 and, subsequently, issued Press Note 3 of 2015 to amend the consolidated foreign investment policy of the Government of India.
• These changes give much needed certainty and clarity to India’s insurance sector and are expected to result in significant foreign investment activity in this sector.