Increasing Equity: First Step To 49% FDI (Automatic Route) In The Insurance Sector

The Central Government has notified the Indian Insurance Companies (Foreign Investment) Amendment Rules 2016 (Amendment).

The Amendment, which has come into force from 16 March 2016, has introduced the following changes to the Indian Insurance Companies (Foreign Investment) Amendment Rules 2015 (Insurance FDI Rules):

1. Rule 5 of the Insurance FDI Rules has been substituted with the following "The Foreign Investment proposals up to49 per cent of the total paid up equity of the Indian Insurance Company shall be allowed on the automatic route subject to verification by the Insurance Regulatory and Development Authority of India."
2. Rule 6, which provided that "Foreign Direct Investment proposals which take the total Foreign Investment in the Indian Insurance Company above 26 per cent and upto the cap of 49 per cent shall be on the FIPB route, and shall require FIPB approval subject to compliance of the provisions of the Act." [sic] has been deleted.