NEW DELHI: Overseas flows into Indian capital markets originating from tax-haven Mauritius witnessed the sharpest decline, while Norway and Singapore gained favour in 2022-23, shows data by the National Securities Depository.
The total assets under custody from Mauritius declined nearly 42 per cent to Rs 3.25 trillion at the end of March 2023, from Rs 5.55 trillion a year ago.
Experts observe that the renegotiation of the India-Mauritius tax treaty and greater scrutiny of flows have dimmed the appeal of the island nation as a preferred destination for overseas capital flowing into India.
Norway and Singapore saw a 13 per cent and 5 per cent increase, respectively, during 2022-23 when the benchmark S&P BSE Sensex and the National Stock Exchange Nifty indices ended little changed. Singapore now is the second biggest jurisdiction for foreign portfolio investor (FPI) flows after the US. Meanwhile, Mauritius’ ranking has dropped to 4 (from 2) at the end of 2021-22.
“Besides Singapore, Mauritius will also face tough competition from Gift City, where investment rules are being liberalised. However, Mauritius won’t concede the turf so easily. It is strengthening its variable capital company (VCC) regime and further improve antimoney laundering standards to remain a preferred jurisdiction amongst investors that set up their shop,” said Neha Malviya Kulkarni, chief growth officer, SuperNAV, an international fund setup advisory.
