Mauritius is strategically located at the intersection of Asia and Africa in the Indian ocean which could provide leverage to India in its trade with Africa.
Mauritius as a gateway to Africa: India and Mauritius have a very close economic relations which is moving very fast owing to the confidence the two nations repose in each other and the various agreements such as comprehensive economic cooperation agreement (CECPA) injecting new vitality to capturing the benefits of huge possibility offered by bilateral trade between the two nations.
After African continental free trade agreement officially commenced from January 2021 of which Mauritius is an important member the trade prospects for India with Africa has grown manifold with Mauritius becoming a gateway to the continent.
Now the Indian manufacturers can use Mauritius as a platform to enter Africa. It has now become very lucrative for the Indian manufacturers to move part of their manufacturing processes to Mauritius and produce for the African market. Also, Mauritius is part of Comesa (Common Market for Eastern and Southern Africa) and SADC (South African Development Community) which provides it access to 600 million consumers in this region.
As India envisages to become a USD 5 trillion economy by 2027-28 and the world’s third largest economy by 2030 the country is looking for green pastures in various countries in which Africa emerge as a very favorable destination for Indian investment.
Not only the merchandise trade but also there is lot of scope in education and health sector where Indian organizations can set up businesses in Mauritius and explore the vast African market.
Also, Indian businesses can set up their production units in Mauritius and export their products to the African nations.
Moreover, investors located in Mauritius will have duty-free access to the European Union, Chinese and US markets receiving preferential terms.
Mauritius a strong trade partner for India
The trade relations between the two countries is improving very fast since 2005 registering a growth of 132 % from USD 206.76 million in 2005-06 to USD 554.19 million in 2022-23. In the FY 2022-2023, Indian exports to Mauritius was USD 462.69 mn while Mauritian exports to India was USD 91.50 mn.
In the period between 2000 – 2022 cumulative FDI worth USD 161 billion came from Mauritius which is 26 percent of total FDI flow to India. In the last five years Indian companies have invested over USD 200 mn.
CECPA gives boost to trade between India and Mauritius
April 1, 2021 marks a very important date as comprehensive economic cooperation agreement (CECPA) between India and Mauritius came into force, which is first of its kind agreement with any African nation. A total of 310 Indian export items including food and beverages, agricultural products, textiles, base metals, electricals and electronic items, plastics and chemicals and products made of wood come under its purview. In August 2022, both sides added a chapter on General Economic Cooperation (GEC) and provisions related to Auto-Trigger Safeguard Mechanism (ATSM) to the CECPA.
Mauritius benefits from preferential market access to India covering a wide range of 615 products such as frozen fish, specialty sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment, and apparel. As a result not only barriers to imports and exports will be removed but it will also provide services trade.
Mauritius is favorable destination for Indian investors and businesses
Mauritius has a very lucrative taxation policy with a harmonized tax rate of 15% for corporate tax. There is no capital gain tax and dividends are tax exempt. Import of machinery, equipment and raw materials are exempt of customs duty and foreign investors can retain 100% shareholding. Companies investing in manufacturing of pharmaceutical products, medical devices, high tech products, food processing can benefit from an eight-year tax holiday.
Eyeing a fast growth several Indian public sector undertakings have built a very strong presence in Mauritius. Presently there are 11 PSUs in Mauritius which includes Bank of Baroda, Life Insurance Corporation, New India Assurance Corporation, Telecommunications Consultant India Ltd, Indian Oil (Mauritius) Limited, Mahanagar Telephone (Mauritius) Ltd., State Bank of India (Mauritius), National Building and Construction Company Ltd (NBCC), Rail India Technical and Economic Service (RITES), Hospital Services Consultancy Corporation Ltd. (HSCC) and EdCIL (India) Ltd.