After long drawn negotiations, the amendment to the 1983 Double Taxation Avoidance Convention (DTAC) was signed by India and Mauritius last May. With the changes, India can impose capital gains tax on investments routed through Mauritius.
While the draft of the CECPA is expected to be ready by the mid part of the year, it may be completed by the year end, Dnyaneshwar Mulay, Secretary (Consular, Passport, Visa and Overseas Indian Affairs departments) at External Affairs Ministry said.
The gamut of India's relation with the island nation off the coast of Africa revolves around investment and taxation, the CECPA is expected to give a boost to bilateral trade.
Case in point, the nation has been the biggest single source of foreign direct investment (FDI) into India since 2000, with total equity inflow of $ 585.95 billion over the period, corresponding to 34 per cent of all FDI.
As opposed to this, trade was only $ 876 million in 2015-16, down from $ 1.93 billion in the previous year.
India exports petroleum products, pharmaceuticals, cereals, cotton and electrical machinery, among others, to Mauritius. Major imports include iron and steel, pearls and precious/semi-precious stones.
Negotiations on the CECPA had broken down in 2013 when India had decided to formally suspend talks owing to differences over the DTAA. India had cautioned Mauritius the negotiations will not resume till the island nation expedited revision of the DTAA.
Speaking at an industry meet organised by industry body CII, Jugnauth said that Mauritius can be a safety net for Indian investors looking to set up in the African continent.
He said that his country has a wide array of DTAAs with most African nations and thereby Mauritius may be a significant stepping stone for Indian investments in infrastructure in Africa.
The nation has consistently been ranked as the most business friendly nation I Africa by the World Bank and is also one of the 10 nations globally, which is completely free from any form of conflict.
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