Mauritius-India: a historic bridge unique in the world
The relationship between Mauritius and India has no equivalent in international finance. Cultural, human and economic ties between the two countries date back to the 19th century, when hundreds of thousands of Indian workers arrived in Mauritius following the abolition of slavery. Today, around 68% of the Mauritian population is of Indian origin, and the two countries share deep linguistic (Hindi, Bhojpuri), cultural and diplomatic ties.
On the financial side, the 1982 bilateral tax treaty made Mauritius the top foreign investor in India for nearly four decades, channelling tens of billions of dollars of portfolio investment (FPI) and direct investment (FDI) into the subcontinent. Despite the 2016 revision of the treaty, Mauritius retains a strong strategic position for investment in India, reinforced by CECPA signed in 2021. The typical structure goes through a Mauritian holding company holding the Indian stakes.
Beyond India, Mauritius is developing its ties with the whole of South and Southeast Asia through a network of tax treaties covering China, Singapore, Malaysia, Thailand, Sri Lanka, Bangladesh, Vietnam and other countries in the region.
The Mauritius-India tax treaty
The tax treaty between Mauritius and India is one of the most important instruments in international finance. Signed in 1982 and revised by protocol in 2016, it is part of Mauritius's network of tax treaties and continues to offer significant benefits for investors structured via Mauritius.
Evolution of the treaty: before and after 2016
| Element | Before 2016 (original regime) | After 2016 (current regime) | Practical impact |
|---|---|---|---|
| Capital gains on Indian shares | Exempt in India (exclusive taxation in Mauritius) | Taxable in India (shared right) | Alignment with the India-Singapore treaty |
| Capital gains on bonds/debt | Exempt in India | Exempt in India (unchanged) | Persistent advantage for Mauritius |
| Dividends | 5-15% withholding | 5-15% depending on shareholding | 5% if shareholding ≥ 10% |
| Interest | Variable | 7.5% maximum | Reduced vs Indian domestic rate (20%) |
| Royalties | Variable | 15% maximum | Reduced vs Indian domestic rate (20%) |
| Technical fees | Variable | 10% maximum | Applicable to management services |
Persistent advantages of the treaty
Investments in bonds and debt
Capital gains on debt instruments (government bonds, corporate bonds, NCDs) remain exempt from tax in India when realised via a Mauritian GBC. This is a unique advantage that Singapore, Hong Kong or Luxembourg cannot offer. For India-focused bond funds, Mauritius is the jurisdiction of choice.
Reduced withholding tax rates
Dividends at 5-15% (vs 20% domestic), interest at 7.5% (vs 20% domestic), royalties at 15% (vs 20% domestic). These significant reductions apply automatically when the GBC presents a valid TRC to the Indian withholder. Substantial savings for recurring flows.
Effective rate of 3% in Mauritius
Indian income (dividends, interest, royalties, fees) received by a Mauritian GBC is taxed at only 3% in Mauritius via the DFTC. Combined with the reduced treaty rates in India, the total tax burden is significantly lower than that of a direct structure or one via a jurisdiction without a DFTC.
Investment protection
The Mauritius-India BIT offers bilateral legal protection to investors: fair and equitable treatment, protection against expropriation, free transfer of funds and access to international arbitration. This legal safety net is valuable in a sometimes unpredictable Indian regulatory environment.
Essential condition — Substance: Since the 2016 revision, India applies a reinforced Limitation of Benefits (LOB) clause. To benefit from the treaty, the Mauritian GBC must demonstrate minimum annual expenditure of Rs 1.5 million (~USD 33,000) in Mauritius and must not be a shell or conduit company. Genuine economic substance (office, staff, management decisions taken in Mauritius) is essential to invoke the treaty's benefits against the Indian tax administration.
CECPA: a new commercial horizon
The Comprehensive Economic Cooperation and Partnership Agreement (CECPA), signed in February 2021 and entered into force in April 2021, is a historic free trade agreement between Mauritius and India. It is the first agreement of its kind between India and an African country, giving Mauritius a unique competitive advantage.
Scope of the agreement
| Area | Content | Benefits for businesses based in Mauritius |
|---|---|---|
| Trade in goods | Preferential access for 310 Mauritian products | Exports to India with reduced or eliminated customs duties (textiles, sugar, processed foods, jewellery) |
| Trade in services | Liberalisation across 115 services sectors | Access to the Indian market for IT, financial, healthcare, education, tourism and professional services |
| Investment | Protection and promotion of bilateral investment | Reinforced framework for FDI in both directions, complementary to the existing BIT |
| Movement of persons | Facilitation of professional travel | Easier work visas for Mauritian professionals in India and vice versa |
| Intellectual property | Reinforced protection framework (TRIPS+) | Enhanced protection for trademarks, patents and copyrights in both jurisdictions |
| Rules of origin | Substantial transformation criteria | Ability to benefit from preferences for products manufactured or processed in Mauritius |
Unique competitive advantage: CECPA positions Mauritius as the only African jurisdiction with a comprehensive free trade agreement with India. No competing financial centre (Singapore, Hong Kong, Dubai, Luxembourg) has such combined access to African markets (SADC, COMESA) AND the Indian market via an FTA. For businesses wishing to operate simultaneously in Africa and India, Mauritius is without equivalent.
Tax treaties with Asia
Beyond India, Mauritius has a network of tax treaties covering the main Asian economies, allowing investments to be structured across the region with reduced withholding taxes.
| Country | Dividends | Interest | Royalties | Notes |
|---|---|---|---|---|
| India | 5-15% | 7.5% | 15% | CECPA in force, active LOB clause |
| China | 5% | 10% | 10% | Jin Fei Special Economic Zone in Mauritius |
| Singapore | 0% | 0% | 0% | Very favourable treaty, synergies between IFCs |
| Malaysia | 5-15% | 15% | 15% | Access to the ASEAN market via Kuala Lumpur |
| Thailand | 10% | 10-15% | 5-15% | ASEAN manufacturing and tourism hub |
| Sri Lanka | 5-15% | 10% | 10% | Geographic and cultural proximity |
| Bangladesh | 10% | 10% | 10% | Fast-growing emerging economy |
| Vietnam | Variable | Variable | Variable | Booming manufacturing economy |
| Pakistan | 10% | 10% | 10-15% | Market of 220 million people |
| Nepal | 5-10% | 10-15% | 15% | Emerging South Asian economy |
Structuring investments in India via Mauritius
Investments in India structured via Mauritius mainly take three forms, each with its own characteristics.
Foreign Portfolio Investment (FPI)
Process
Creation of a GBC in Mauritius, registration with SEBI (Securities and Exchange Board of India) as an FPI Category I or II via a Designated Depository Participant (DDP). The GBC obtains an Indian PAN (Permanent Account Number) and opens a depository account with an Indian custodian (CDSL or NSDL).
Advantages
Access to the BSE and NSE markets (equities, bonds, derivatives). CGT exemption in India on bonds via the treaty. Reduced withholding on dividends (5-15%). Effective tax rate of 3% in Mauritius on Indian income. Administration and compliance handled from Mauritius by the Management Company.
Foreign Direct Investment (FDI)
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Creation of the holding GBC
Incorporation of a GBC in Mauritius with an FSC licence. Capitalisation via investor contributions. Appointment of qualified resident directors. Obtaining the TRC from the MRA. The GBC must have genuine economic substance (office, staff, annual expenditure ≥ Rs 1.5M).
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Investment in India
Subscription to the capital of an Indian company (new or existing). Compliance with RBI (Reserve Bank of India) rules on FDI: permitted sectors, shareholding caps, automatic route or prior approval. Mandatory RBI reporting (FC-GPR, FC-TRS).
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Management and repatriation
Receipt of dividends with reduced withholding (5-15% vs 20% domestic). Interest on intercompany loans (ECB) with 7.5% withholding. Royalties and management fees with reduced withholding. All this income is taxed at 3% in Mauritius via the DFTC.
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Exit
Disposal of the Indian shareholding. Since 2016, capital gains on shares are taxable in India (Indian CGT applies). Capital gains on debt/bonds remain exempt in India via the treaty. The proceeds of disposal are repatriated to Mauritius and then distributed to investors with 0% withholding.
India-focused investment funds
Many funds targeting India are domiciled in Mauritius under an FSC licence, making the island a preferred platform for fund structuring. The most common structures:
India-focused private equity
Closed-End Fund or Limited Partnership in Mauritius investing in growing Indian companies (mid-market, growth capital, buyout). Typical duration of 8-10 years with extensions. Classic GP/LP structure with carried interest. Mauritian Management Company handling administration.
Venture capital
Financing of Indian startups in fintech, healthtech, edtech, SaaS, e-commerce and deep tech. Possible registration as a SEBI Alternative Investment Fund (AIF) Category I or via the FPI route. The Indian VC scene is one of the most dynamic in the world.
Bond and debt funds
Investment in Indian government bonds (G-Secs), corporate bonds and NCDs (Non-Convertible Debentures). Key advantage: capital gains remain exempt in India via the treaty. The Indian bond market is one of the largest in Asia with attractive yields.
Real estate and infrastructure
Funds investing in Indian commercial and residential real estate, infrastructure projects (roads, energy, ports) and listed REITs/InvITs. The Indian real estate sector represents a market of USD 200+ billion with sustained growth.
Mauritius and Southeast Asia
Beyond India, Mauritius is actively developing its ties with Southeast Asia and East Asia, positioning itself as a bridge between Africa and Asia.
China
Tax treaty with 5% withholding on dividends. Jin Fei Special Economic Zone in Mauritius, developed by a Chinese consortium. Growing trade links under the Belt and Road Initiative (BRI). Chinese investments in Africa structured via Mauritius.
Singapore
Very favourable tax treaty (0% withholding on dividends, interest and royalties). Natural synergies between the two financial centres: Mauritius for Africa, Singapore for ASEAN. Combined Mauritius + Singapore structures for pan-Africa/Asia groups.
ASEAN
Mauritius as a bridge between Africa and ASEAN via treaties with Malaysia, Thailand and Vietnam. South-South trade and investment opportunities. The Mauritius-India CECPA indirectly opens doors to the Indian trade ecosystem connected to ASEAN (RCEP).
Look East Policy
The Mauritian government's "Look East" policy aims to strengthen economic ties with Asia. This includes negotiating new tax treaties, developing trade corridors and attracting Asian investment into Mauritius and into Africa via Mauritius.
Our expertise in Asian investments
Our team has deep expertise in structuring investments into India and Asia via Mauritius, covering the entire investment cycle.
- FPI/FDI structuring — Creation of GBCs to invest in India, obtaining TRCs, establishing the required substance
- SEBI registration — Full assistance with registration as an FPI (Category I/II) with the Indian regulator via a DDP
- India-focused funds — Structuring of CIS and CEF targeting Indian markets (equity, debt, real estate, infrastructure)
- LOB compliance — Establishing and maintaining the economic substance required to satisfy the limitation of benefits clause
- CECPA optimisation — Advice on using CECPA benefits for trade in goods and services with India
- China/ASEAN structures — Using treaties with China, Singapore and Malaysia for investments in Southeast Asia
Invest in India and Asia via Mauritius
Mauritius remains the leading platform for investments in India and Asia, combining significant tax benefits, treaty access and the unique CECPA agreement. Contact our experts to design your Asian investment strategy.