Irdai permits insurance firms to begin offshore business from GIFT IFSC

Sectoral regulator Irdai has issued regulations for insurance firms to carry out offshore business from Gujarat-based GIFT International Financial Services Centre (IFSC).

Insurance operations will get a major boost with Insurance Regulatory and Development Authority of India (Irdai) issuing enabling regulations for undertaking offshore insurance business from IFSC, Gujarat International Finance Tec-City (GIFT) IFSC said in a statement today.

"Under the regulations, for the first time in the country, foreign insurers are permitted to open IFSC Insurance Office (IIO) at GIFT IFSC," it said.

Companies would also be allowed to undertake domestic insurance and reinsurance business in line with the provisions of Irdai regulation, it said further.

Those firms opening an office at GIFT IFSC are permitted a 10-year tax holiday, complete tax holiday in first five years and a tax reduction of 50 per cent for the remaining five years.

For export of services, insurance companies operating from IFSC are exempted from GST.

GIFT IFSC, being a foreign territory mainly conducts offshore business, so the restriction on shareholding does not apply in IFSC and thereby a foreign direct insurer has option to set up operations directly without any local partner.

The Irdai regulations would help Indian insurers to set up their offshore office in GIFT SEZ IFSC to undertake dollar business which otherwise was restricted in India, GIFT IFSC said.

This would become a big enabler for Indian direct and re-insurance players as it provides them a foreign branch in close proximity which would be operationally cost-effective.

"With the business guidelines in place, we are now hopeful that foreign and domestic insurance companies would participate in making GIFT IFSC a hub for International Insurance business," said Ajay Pandey, MD & Group CEO, GIFT City.

GIFT IFSC already hosts three major insurance players, GIC Re, New India and ECGC, besides five insurance broking entities, he said.