Q: 30 (IAS/2010)
question_subject:
Economics
question_exam:
IAS
stats:
0,139,47,20,139,17,10
keywords:
{'mauritius': [1, 1, 1, 1], 'foreign direct investment': [0, 0, 2, 7], 'global climatic change prompt mauritius': [0, 0, 1, 0], 'fdi': [0, 0, 3, 7], 'india': [8, 1, 7, 13], 'certain countries': [0, 0, 1, 0], 'double taxation avoidance agreement': [0, 0, 1, 0], 'huge investments': [0, 0, 1, 0], 'mature economies': [0, 0, 1, 0]}
The main reason for Mauritius to be the largest source of FDI to India is due to the existence of a Double Taxation Avoidance Agreement (DTAA) between India and Mauritius. The DTAA allows foreign investors to route their investments through Mauritius to take advantage of tax benefits. This means that companies or individuals can invest in India through a Mauritius-based entity, and they will only pay taxes in Mauritius, which has a lower tax rate. Thus, Mauritius has become a favored destination for foreign investors who want to invest in India. Additionally, it is important to note that Mauritius has a well-developed financial system and a stable political environment, which also makes it an attractive destination for investors.