Aviva Becomes the First Foreign Insurer to Take Full Ownership of its Life Insurance Business in India Following Changes in FDI Rules

British insurer Aviva has become the first foreign life insurance company to acquire full ownership of its business in India. The company has agreed to purchase the remaining 26% stake in Aviva Life Insurance Company India from its joint venture partner, Dabur Invest Corp.

This deal follows the central government’s decision earlier this year to permit 100% Foreign Direct Investment (FDI) in the insurance sector. That decision eliminated the requirement for foreign insurance companies to operate through an Indian joint venture partner.

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Aviva confirmed the acquisition on Thursday, although the *Economic Times* had previously reported on the proposed deal, citing sources familiar with the matter. Reuters later reported that an agreement had been reached.

According to the Reuters report, the London-headquartered insurer did not disclose the financial terms of the deal and stated that the acquisition is not expected to have a significant financial impact on the group.

First Deal Under New FDI Rules

This acquisition follows one of the most significant policy changes in India’s insurance sector in recent years. The government has raised the Foreign Direct Investment (FDI) limit in insurance companies to 100% from the previous 74% of paid-up equity capital, paving the way for foreign insurance companies to acquire full ownership of their Indian operations.

This acquisition by Aviva is the first major life insurance deal under the new regulations, and other multinational insurance companies operating in India are expected to watch it closely.

Aviva with Dabur:  25-Year Partnership Ends

Aviva entered the Indian insurance market in 2001 through a joint venture with Dabur Invest Corp, shortly after the sector was opened to private companies. The company gradually increased its stake whenever regulations were relaxed.

According to Reuters, Aviva raised its stake to 49% in 2016 following changes in FDI norms and increased it further to 74% in 2022 after another policy shift. With this latest acquisition, it will now hold a 100% stake in the Indian life insurance business. This deal also marks the end of Dabur’s relationship with the insurance company, which spanned more than two decades.

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