Two regimes
Onshore insurance is regulated by IRDAI under the Insurance Act, 1938 and the IRDA Act, 1999. Insurance in an IFSC is regulated by IFSCA, which exercises the relevant powers under sections 12 and 13 of the IFSCA Act, 2019. An IFSC Insurance Office (IIO) is registered by IFSCA, not licensed by IRDAI, and conducts its business in freely convertible foreign currency.
The regimes meet at two points. An Indian insurer cedes reinsurance to an IIO only under IRDAI's order of preference. And an IIO may write direct insurance from the Domestic Tariff Area only in accordance with section 2CB of the Insurance Act.
The mainland routes after 2025-26
An Indian insurance company. Three instruments, read together, allow foreign ownership of up to 100%:
- section 3AA of the Insurance Act, inserted by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (Act 40 of 2025), which raises the foreign investment cap to 100%;
- DPIIT Press Note No. 1 (2026 Series) of 9 February 2026, which places insurance under the automatic route; and
- the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025 (G.S.R. 928(E), 30 December 2025). Under the substituted rule 4, at least one of the chief executive, managing director and chairperson must be a resident Indian citizen. Rule 4A, which imposed extra governance requirements above 49% foreign ownership, is omitted.
No government approval is needed for the investment, but the company still needs an IRDAI certificate of registration through IRDAI's staged process. Minimum paid-up capital under section 6(1) of the Insurance Act is INR 100 crore for life or general insurance.
A foreign reinsurance branch registered with IRDAI. Branches rank in Category 2 of the cedant's order of preference.
A cross-border reinsurer with no Indian presence. Indian insurers may cede to it only if it meets IRDAI's criteria, including a rating of at least BBB for three years and a home country with an Indian tax treaty. It ranks in Category 4.
The IFSC routes
- IIO branch of a foreign insurer or reinsurer: assigned capital equivalent to USD 1.5 million, held in the home country, and solvency as the home regulator requires. A branch writing reinsurance also needs parent net owned funds under section 6(3) of the Insurance Act.
- Incorporated IIO: a public company or wholly owned subsidiary of an insurer or reinsurer, with paid-up capital under section 6(1) and IFSCA's solvency rules.
- Lloyd's IFSC and its service companies: see Lloyd's and service companies.
- Managing general agent or intermediary office for groups that want to distribute or place rather than carry risk: see insurance intermediary offices.
A foreign applicant for an IIO branch needs a no-objection certificate from its home regulator, a home country with an Indian tax treaty, a credit rating showing at least good financial security characteristics for three years, and a FATF-compliant jurisdiction.
Compared
| Mainland (IRDAI) | GIFT IFSC (IFSCA) | |
|---|---|---|
| Regulator | IRDAI | IFSCA |
| Typical form | Indian company; reinsurance branch | Branch IIO; incorporated IIO |
| Currency | Rupees | Freely convertible foreign currency |
| Direct insurance | Indian risks and policyholders | IFSC, other SEZs and outside India; DTA only under section 2CB |
| Reinsurance of Indian insurers | Foreign reinsurance branch: Category 2 | Category 2 or 3, depending on investment of retained Indian premium |
| Capital | Section 6, Insurance Act | USD 1.5 million assigned (branch) or section 6 (company) |
| Income tax | Ordinary corporate tax | Section 147 deduction available |
Our Research Vol. II, Four-Lane India Entry for Insurance, sets out the routes in detail.
Using both
- An IIO set up by an Indian insurer as a place of business needs an IRDAI no-objection certificate. An IRDAI-registered branch of a foreign insurer, or Lloyd's India, may also set up an IIO.
- Where a group's mainland insurer reinsures with the group's IIO, the IRDAI placement rules and transfer pricing both apply. See reinsurance from GIFT IFSC.
- A group with several Indian entities should keep the foreign parent's management and decision-making outside India.