RAS question
After the Union Cabinet's approval of 100% FDI in India's insurance sector in December 2025, what key condition was imposed to ensure domestic oversight?
Correct answer: (A) At least one top leadership position (Chairperson/MD/CEO) must be a resident Indian.
After India allowed 100% foreign ownership in the insurance sector, at least one key position, Chairperson of the Board, Chief Executive Officer or Managing Director, had to be held by an Indian resident.
Explanation
UNCTAD's Investment Policy Monitor records that India allowed 100% foreign direct investment in the insurance sector by removing the earlier 74% foreign ownership cap. The important safeguard was not a retained Indian equity stake, but a governance condition in the Indian Insurance Companies (Foreign Investment) Rules: at least one key position, namely Chairperson of the Board, Chief Executive Officer or Managing Director, must be held by an Indian resident. That is why option A captures the domestic oversight requirement. IRDAI oversees compliance, and the move followed earlier FDI-cap increases from 26% to 49% to 74% before full foreign ownership was permitted.
Why the other options are wrong
- (B) A compulsory 26% Indian equity holding contradicts the move to 100% foreign ownership and the removal of the earlier 74% cap.
- (C) The requirement was for at least one key position to be held by an Indian resident, not for listing on Indian stock exchanges within five years.
- (D) The condition was about who must hold one top governance position; the material does not say that IRDAI would fix insurance premiums.
Concept
This tests Indian Economy, specifically FDI liberalisation in a regulated financial service and the governance safeguard attached to it. Such questions hinge on the exact condition imposed with a policy change, not merely on the headline percentage.