FDI coming into the country

As India continues to worry about capital outflows, the regions that originate most of the FDI coming into the country hold importance. As per RBI, Mauritius continues to corner more than 44% of the FDI coming into the country. And despite the quandary over Mauritius' tax haven status, the government may not be able to take a firm decision on this. One may recall that India was earlier planning to review the double-taxation avoidance agreement (DTAA) with Mauritius. The reason behind the review is to prevent misuse of the treaty and track illicit money allegedly stashed in the African island nation. The country was losing more than US$ 600 m every year in revenue b ecause of the tax treaty, beside s incurring the risk of militant groups using it to route money into India. However, all such considerations seem to be in the backburner for the time being. More importantly, besides Mauritius even Netherland and Cyprus seem to be merging as the new tax havens. 

Why Mauritius is important to India...

Source: RBI