Mauritius has regained the position as top source of foreign direct investment (FDI) into India by pushing Singapore to the second slot in 2014-15.
Mauritius accounted for about 29 per cent of the country’s total FDI inflows last fiscal. In 2013-14, Singapore had replaced Mauritius as the top source of FDI into India.
India attracted $ 9.03 billion in FDI from Mauritius in 2014-15, whereas it was $ 6.74 billion from Singapore, according to the data of the Department of Industrial Policy and Promotion (DIPP).
According to experts, the benefits under tax treaty and deferment of General Anti-Avoidance Act (GAAR) by two years has helped investors.
"The deferment of GAAR has given confidence to investors to enhance investments in India," Head of Tax and expert on FDI with corporate law firm Shardul Amarchand and Mangaldas Krishan Malhotra said.
FDI inflows from Mauritius had declined due to fears of the impact of GAAR, he added.
Although Singapore has come down to the second position, foreign inflows from that country are increasing year after year. FDI inflow of $ 6.74 billion in 2014-15 was the highest ever received from Singapore since 2006-07.
The controversial GAAR provision, which seeks to check tax avoidance by investors, has been deferred by two years. The government had earlier proposed imposing GAAR from April 1, 2015.
The India-Mauritius DTAA is being revised amid concerns that Mauritius is being used for round-tripping of funds into India even though that country has always maintained that there has been no concrete evidence of any such misuse.
Foreign investments are crucial for India, which needs about $ 1 trillion by March 2017 to overhaul infrastructure such as ports, airports and highways and boost growth.
Overall FDI into India grew by 27 per cent year-on-year to $ 30.93 billion in 2014-15.
Other nations from where foreign inflows are increasing include Japan, the Netherlands, the US, Germany, France and the UAE during the last financial year.