gs1medium
A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economies like UK and France. Why?
- A.India has preference for certain countries as regards receiving FDI
- B.India has double taxation avoidance agreement with Mauritius
- C.Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India
- D.Impending dangers of global climatic change prompt Mauritius to make huge investments in India
▶ Answer & Explanation
Correct answer: B. India has double taxation avoidance agreement with Mauritius
The significant flow of FDI from Mauritius to India is primarily driven by tax treaties. India has a Double Taxation Avoidance Agreement (DTAA) with Mauritius, which allows for lower capital gains tax rates on investments routed through the island nation. This tax advantage makes it an attractive intermediary for foreign investors, even from developed economies, seeking to invest in India.
Source: UPSC gs1 2010