WTO Secretariat Report (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (7) DEVELOPMENTS IN FOREIGN DIRECT INVESTMENT: (Page18, paragraph 48)
The Report mentions that Mauritius remains the largest source of FDI, accounting for approximately 40.2% of inward FDI flows in 2009/10. Part of these large flows may result from the advantages of the tax treaty between Mauritius and India, which may make it attractive for investors to route their investment through Mauritius to take advantage of the preferential provisions, which include exemption from the capital gains tax.
Our questions are:
Could India please describe the contents of its tax treaty with Mauritius, especially in terms of the advantages it offers to each of the parties? Does India offer more advantages to Mauritius, for example, than to other countries?
Does the fact that Mauritius is such a large source of FDI indicate that India's domestic investors route their investments through Mauritius, and, if so does this cause problems for FDI management?
Reply: FDI coming in from Mauritius is not perceived as being unlike FDI coming in from other countries and is also not perceived as causing a problem in the management of FDI.
