The country is the largest source of FDI. It is thanks to the Treaty of double taxation that the country ranks first. The country is far ahead of Singapore, with 9%, Japan 8% and the United States, 6%, among others.
Nevertheless, investment from Mauritius are expected to decline in the medium and long term, say some observers of the Great Peninsula. The reason: the possible revision of the Indo-Mauritius treaty. The stated objective of the Indian authorities is to add a protocol under which the investor status will be reviewed, as the treaty between New Delhi and Singapore. The idea is to impose conditions on the investor to prove that he is indeed a resident of the country from which the investment flows. Information such as the minimum level of annual expenses incurred in the country where resident status is claimed, will be required.
investments from tax havens have been under close surveillance in the fight against the Indian money laundering. India has negotiated agreements to exchange tax information with 14 countries. In addition, 18 Double Taxation Avoidance Treaty (DTAA) exist are being reviewed for information sharing in banking and tax, and 18 new negotiations are underway.
It is estimated that Indian, Great Peninsula lost nearly Rs 20 billion annually in income because of the DTAA with Mauritius, because of Round-Tripping. The Indian government is facing intense pressure from civil society, opposition parties and also the Supreme Court on black money from tax havens. Mauritius is considered by them as a tax haven as well as Switzerland.