GFIA Global Federation of Insurance Associations

The Global Federation of Insurance Associations (GFIA) has written to the Indian government welcoming its proposal to amend the Insurance Act of 1938, which would raise the foreign ownership cap in insurance companies from 74% to 100%. While this is a positive step toward liberalising the market, GFIA is calling for further reforms to remove unnecessary regulatory safeguards and to introduce equity in tax contributions.

GFIA notes that although raising the cap on Foreign Direct Investment (FDI) is a welcome move to attract greater foreign investment, existing safeguards, "present the most significant obstacle for investors." The letter highlights foreign restrictions on board composition, citizenship requirements for senior management, and higher solvency margins for profit repatriation as the most significant hurdles for foreign insurers and reinsurers and urges their removal.

The letter also calls for a level playing field in corporate taxation. Domestic insurers and reinsurers currently pay a corporate tax rate of 25% plus surcharge, compared to 35% paid by their foreign counterparts. “Tax parity would be another opportunity to level the playing field for foreign investors in India’s insurance sector,” the letter states.