In march 2020, foreign portfolio investment (FPI) from Mauritius accounted for a total of 11% of the total FPI inflow in the country. It held a spot doon after the United States which has the largest percentage of FPI inflow. Mauritius holds this sport and is popular due to the conducive regime, structuring of fund vehicles etc. Furthermore, the cost of including and operating a vehicle is also competitive in Mauritius in comparison to the financial services of other nations.
The tax regime of that country is a reason for its popularity as it is structured as well as friendly in nature, both, domestic tax rates and bilateral tax agreements with other countries.
Moreover, the biggest edge is provided by the Double Taxation Avoidance Agreement (DTAA) between India andMauritius. It provides many advantages like, ‘beneficial interest withholding rate of 7.5 percent’ or ‘exemptions from capital gains arising out of derivatives and debt instruments like debentures’.
In the year 2019, India redesigned its FPI pattern and notified the FPI Regulations, 2019. Under the changed FPI regime, the earlier listed three categories of FPIs have been changed and collapsed into two main categories, i.e., Category I FPI and Category II FPI. The first category includes sovereign wealth funds, pension funds etc and the second category includes entities which are not included in I FPI.
Dealing with the current status of the FPI with Mauritius, it is now brought at the same level with other preferred countries, lending comfort to the financial services industry who have established their base in Mauritius for merely unlocking access to India. Thus, with the numerous changes, Mauritius is set to reclaim their respect and position.