On 29 August 2025, the Ministry of Finance issued draft rules (“Draft Rules”) to amend the Indian Insurance (Foreign Investment) Rules, 2015 (“Foreign Investment Rules”). The Foreign Investment Rules prescribe conditions for foreign investment in Indian insurance companies and insurance intermediaries including related to governance and repatriation of dividend.

This is the most recent regulatory move, and yet another indication,  by the Indian Government to enable 100% foreign direct investment (“FDI”) in Indian insurance companies, and follows the announcement by the Finance Minister (“FM”) on 1 February 2025 that 100% FDI would be allowed in the insurance sector (see our previous alert). As part of this announcement, the FM had stated that current guardrails and conditionalities associated with FDI will be reviewed and simplified and the amendments proposed in the Draft Rules are indicative of the much more relaxed regime that the Government is proposing.

While the above conditions were not viewed as particularly onerous for foreign investors, their removal would still be a welcome step and allow insurance companies and their foreign promoters great freedom in structuring and administering their India business. Being allowed to set up an independent business, without depending on a local partner, is likely to be gamechanger when foreign insurers consider and develop their India strategy.

In addition to finalising the Draft Rules, the Government has to implement other amendments including to the Insurance Act, other insurance regulations and the foreign exchange control rules before 100% FDI can be made in Indian insurance companies. Press reports suggest that the amendments to the Insurance Act may be taken up during the winter session of the Parliament.

Authors: Deepa Christopher – Partner and Rebha Dakshini – Partner 

Disclaimer: This alert only highlights key issues and is not intended to be comprehensive. The contents of this alert 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 alert should be considered an advertisement or solicitation of TT&A’s professional services.