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Insurance and Social Security in India

Are you an expat-to-be planning on working in India? Our InterNations Expat Guide provides foreign assignees and employees with essential information on India’s economic sectors, social security, taxes, and general opportunities for working in India. Get prepared for expat life with our guide!
Overseas assignments are the most common routes to working in India.

Social Security: Leaving the Informal Sector Untouched

India has a very basic social security system catering to a fairly small percentage of the country’s workforce. Traditionally, Indians relied on their extended families for support in the event of illness or other misfortunes. However, due to migration, urbanization, and higher social mobility, family bonds are less tight and family units much smaller than they used to be. So far, neither the state nor private insurance companies have quite stepped up to fill this gap.

There are two major social security plans in India, the Employees’ Provident Fund Organization (EPFO) and the Employees’ State Insurance Corporation (ESIC). The EPFO runs a provident fund, also known as a pension scheme, and an insurance scheme. All of these are supposed to grant EPFO members and their families benefits for old age, disability, and support in case the primary breadwinner dies.

The ESIC, on the other hand, covers low-earning employees providing them with basic healthcare and social security schemes. Originally aimed at factory workers, the coverage was extended to include greater parts of the population, e.g. employees in hospitals or educational institutions. The ESI scheme has been implemented in all states excluding Manipur and Arunachal Pradesh.

However, government enforcement strategies are not very efficient, and many employers who should be paying contributions for their staff fail to do so. Moreover, the “unorganized” sector, i.e. enterprises — mainly in agriculture — which are not legally covered by any form of social security, is disproportionately large. In 2014, around 92% of India’s labor force worked in the informal sector, which means around 370 million Indians, not to mention their dependents, were excluded from social security schemes.

Expats: India’s Excluded Employees

Anyone working in India for a prolonged period of time will have to pay social security contributions of 12% of their income if they are employed by a company covered by the EPFO. However, India has mutual social security agreements with some European countries, as well as those listed below, which entitles expats of certain nationalities to keep contributing to their social security back home making sure their benefits don’t cease when they leaving for India. Such an agreement gives the expats in question the status “excluded employee”. The conditions for these agreements differ per bilateral agreement, but, in general, it only applies to expats whose assignment in India does not exceed five years.

India has signed social security agreements with Belgium, the Czech Republic, Denmark, France, Germany, Hungary, Luxembourg, the Netherlands, Finland, Sweden, Austria, Canada, Australia, Japan, Portugal, Norway, the Republic of Korea, and Switzerland. Negotiations with additional countries are in progress. However, before you leave for India, please check with your social security administration at home if the agreement has indeed been signed and, most importantly, is officially in force. You can also check the Emigration Services website of the Ministry of Overseas Indian Affairs for up-to-date information on the subject.

Health Insurance: Private Insurances and Hospitals Take the Lead

It is highly recommended to have adequate health insurance coverage before going to India! Most international private insurance companies are now moving into the Indian market. While most expats are likely to work for companies that are part of the EPFO or ESIC, there are bound to be problems with public healthcare provisions.

Public facilities are often poorly maintained and lacking in state-of-the-art medical equipment. In more rural areas, people have been known to travel for days to find a hospital with adequate facilities for their injury.

This is not to say that good medical treatment is not available in India, quite the contrary is true, in fact. However, do keep in mind that many hospitals fall within the private sector, which is not covered by public health insurance — the private sector makes up 74% of hospitals and 40% of hospital beds in India.

India: Where Shortcomings Become Opportunities

The most common route which leads foreign employees to India is the traditional expat assignment. Due to the country’s lasting economic growth and a largely untapped market, multinational companies as well as new investors open branches and businesses in India. One key factor in this development is India’s young and rapidly growing workforce.

However, as mentioned above, the country is still lacking in comprehensive and efficient infrastructural provisions. While, of course, presenting a major problem to foreign companies and their employees, this shortcoming could also be seen as a business opportunity. Not only are there significant tax incentives for businesses willing to engage in the development, maintenance, or operation of infrastructure facilities, but the market for such enterprises is huge.

When it comes to social infrastructure, the private healthcare sector in particular is generally considered to be a goldmine for foreign investors and qualified medical personnel from abroad, as there is currently a lack of sufficient medical professionals. Less conventional employment opportunities for potential expats can be found in teaching or tourism, two other areas where demand still exceeds supply. Some major international job search engines include Monster and NaukriHub, which also cover the Indian market. Shine is also a popular Indian job website.


We do our best to keep this article up to date. However, we cannot guarantee that the information provided is always current or complete. 

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