FDI In Insurance: Rules Relaxed, But Not Everyone’s Jumping In
The government now allows 100 per cent foreign direct investment (FDI) in insurance to make it easier for global insurers to enter India without needing an Indian partner.
What Is Really Happening On The Ground?
Despite the relaxed cap, most insurers haven’t raised their foreign ownership beyond the older limits of 49 per cent or 74 per cent. As of December 2024, the average foreign holding in private life insurers was just under 49 per cent. In general insurance, it was around 40.8 per cent, and in standalone health insurance, even lower—just 29.5 per cent.
Why Does It Matter To You?
Higher FDI could bring in fresh capital, global expertise, better products, and improved customer service. But with many insurers choosing to stay within older limits, those benefits are slow to reach the market.
A Look At Current FDI Trends
Life insurers like Ageas Federal and Aviva Life have reached 74 per cent, the old cap. Others, like Bajaj Allianz Life (26 per cent) and HDFC Life (25.3 per cent), remain much lower. Kotak Mahindra General Insurance has 70 per cent foreign holding, but most others are below 50 per cent. ManipalCigna is among the highest in standalone health insurance, at 48.96 per cent.
1 July 2025
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Why Companies Are Holding Back
The decision lies with company promoters. Factors include capital requirements, regulatory comfort, desire for Indian control, and long-term strategy.
The Bottom Line
The doors are open for foreign insurers—but most companies are still choosing to stay where they are.
Summary of this article
The government may have raised the ceiling on foreign investment in insurance to 100 per cent, but most companies aren’t in a hurry to raise their foreign stakes. This was made clear in Parliament earlier this week, when Finance Minister Nirmala Sitharaman answered a question on the matter in the Lok Sabha on July 28.
FDI Levels Vary Widely Across Insurers
The reply, backed by data from the insurance regulator (Irdai), shows that while some insurers have brought in a fair amount of foreign capital, many haven’t gone beyond the earlier 49 or 74 per cent thresholds. As of the end of December 2024, several life insurers had significant foreign ownership—Ageas Federal and Aviva Life, for instance, were both at 74 per cent, the old cap. However, others, such as Bajaj Allianz Life and HDFC Life, remained at 26 per cent and 25.3 per cent, respectively. On average, foreign shareholding in private life insurers stood at just under 49 per cent.
It’s a similar story in general insurance. The overall foreign share in private general insurers was around 40.8 per cent. Kotak Mahindra General Insurance had 70 per cent foreign capital, but most others had less. In standalone health insurance, the foreign share was even less—about 29.5 per cent on average, with ManipalCigna close to the earlier cap at 48.96 per cent.
Companies Cite Capital Needs, Strategy For Holding Back
So why haven’t more companies taken advantage of the higher FDI limits? The Finance Minister said the decision to raise foreign shareholding is up to each company’s promoters. They weigh factors like how much capital they need, regulatory requirements, and their future business plans. In some cases, companies might feel they don’t need foreign money right now. Others may prefer to keep more control in Indian hands.
The government says allowing 100 per cent FDI is meant to make it easier for foreign insurers to set up shop in India, without needing a local partner. The hope is that this will increase competition, improve service quality, and help bring insurance to more people.
For now, though, the change in rules hasn’t led to a flood of new foreign investment. Most companies seem to be holding steady. The door is open, but not everyone is stepping through it just yet.
