India and Mauritius are negotiating the finalisation of a “ground breaking” Comprehensive Economic Cooperation and Partnership Agreement (CECPA) that will boost trade and investment between both countries, visiting Mauritius Prime Minister Pravind Kumar Jugnauth said on Friday.
“The CECPA that is currently being negotiated will be a ground breaking agreement between both nations with close cultural links,” Jugnauth said at a business meeting here organised by industry chambers CII, Ficci and Assocham.
He said that the CECPA, or a free trade agreement, builds on the India-Mauritius Double Tax Avoidance Agreement (DTAA) that was amended last year.
“The CECPA negotiations buid on the DTAA signed by our contries in 2016, which will give certainty to mutual investments,” the Prime Minister said, noting that over 100 Indian companies are doing business in Mauritius.
The Indian Ocean island nation is the largest source of foreign direct investment (FDI) into India with a cumulative inflow that has touched $111 billion. Mauritius, thus, accounting for 30 per cent of all FDI inflows into India.
The DTAA protocol agreement with Mauritius in 2016 aims to prevent evasion of taxes on income and capital gains by entities of either side. It is designed to tackle a long-pending issues of treaty abuse — where ill-gotten money is first sent to Mauritius through havala transactions, and then comes back as a legitimate investment. This is called round-tripping.
“More than fifth of Mauritius’ imports come from India, amounting to over a $1 billion, making India our second largest trading partner,” Jugnauth said.
He invited Indian business to invest in Mauritius, pointing to its strategic location “in the cornerstone between India and Africa” and its World Bank ranking as the “most business friendly country in Africa.”
“Investments in Mauritius will give Indian companies preferential market access to the US and to Africa through the COMESA (Common Market for Eastern and Southern Africa),” he said, adding that Indian businesses could also profit from Mauritius’ bilateral arrangements with many African countries.
India-Mauritius trade in 2014-15 was worth around $1.9 billion