India and Mauritius have begun talks to revise their Comprehensive and Economic Cooperation and Partnership Agreement (CECPA) and Preferential Trade Agreement (PTA)—within months of the two countries sorting out long-pending issues relating to their double taxation avoidance treaty, reports livemint.com
Revision of the CECPA has been a longstanding demand by Mauritius, a major source of foreign direct investments coming into India.
That the two countries had started talks on the two subjects was announced after talks between Indian external affairs minister Sushma Swaraj and Mauritius finance minister Pravind Jugnauth in New Delhi on Tuesday.
Pravind Jugnauth is the son of Mauritius Prime Minister Anerood Jugnauth, who is of Indian origin. He was named finance minister in his father’s cabinet in May.
“The longstanding request from Mauritius for restarting negotiations of CECPA and PTA had also been met, with discussions yesterday in Port Louis,” a statement from the Indian foreign ministry said.
Revising the CECPA and the FTA with India had been mentioned by Jugnauth in his 2016-17 budget speech, a PTIreport said.
India exports petroleum products, pharmaceuticals, cereals, cotton and electrical machinery, among others, to Mauritius. The island nation’s exports to India include iron and steel, pearls and precious and semi-precious stones.
In 2014-2015, India exported $ 1.9 billion worth goods to Mauritius while imports during the same period were to the tune of $ 21.19 million, according to government figures.
The Indian statement quoted Swaraj as saying that India had “always given full support to the development priorities of Mauritius. We are finalising the MoU (memorandum of understanding) under which the Metro Express project and other projects announced by Jugnauth in his budget could begin to be implemented.”
The Indian minister also thanked Jugnauth for “the forward looking decision which had allowed the protocol on the amendment of the DTAC ( Double Taxation Avoidance Convention). This, she said, had added to Mauritius’ financial credentials,” the Indian statement said.
According to the Indian high commission in Mauritius, the island nation was the “single largest source of Foreign Direct Investment or FDI into India during the financial year 2014-15, with FDI equity inflows amounting to $ 9.03 billion or 29 % of total inflows in 2014-15.”
After long-drawn negotiations, the amendment to the 1983 Double Taxation Avoidance Convention (DTAC) was signed by India and Mauritius in May.
With the changes, India can impose capital gains tax on investments routed through Mauritius. For two years starting from April 1, 2017, capital gains tax would be levied at 50 % of the prevailing domestic rate and after that, the full rate would be applicable.
During their talks, the two ministers agreed that the India-Mauritius partnership had played a critical role in ensuring peace and stability in the Indian Ocean Region. In this context, both leaders called for greater collaboration in the area of defence and security. India offered to provide assistance in terms of hydrographic surveys.
“The two leaders also discussed their concerns on terrorism and agreed to increase the collaboration in this area,” the statement said.