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India – Insurance Updates.

23 October, 2014

 

 

As part of the Union Budget, a proposal has been made to increase the cap on FDI in the insurance sector, from 26% to 49%. The Union Finance Minister, as part of his budget speech, introduced the proposal, and mentioned that the increase will be subject to “…full Indian management and control…”.

 

While the full extent of the implications will have to be assessed based on amendments incorporated to the Insurance Act, 1938, and rules/ guidelines framed for this purpose, it remains to be seen how the requirement for “full Indian management and control” will be interpreted and whether this will result in the foreign investor having to cede all or substantially all operational and management rights to the Indian partner. It also remains to be seen whether a similar requirement will apply to foreign partners who remain at 26% and do not step up their shareholding.

 

The Indian Parliament has constituted a committee to review the proposed increase in the FDI cap together with the proposed amendments. However, the recommendations of the committee have not been formalized.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 

shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 

percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

 

AZB & Partners Insurance & Reinsurance Practice Profile in India


Insurance & Reinsurance Law Firms in India 

 

 

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