India, Mauritius back to negotiating free trade pact

Amiti Sen New Delhi | Updated on January 08, 2018

With bitterness over revised DTAA behind them, trade officials met recently to revive negotiations

India and Mauritius are back on the negotiating table to revive efforts for a free trade agreement that was suspended in 2013 due to disagreement over the Double Taxation Avoidance Agreement (DTAA). The two countries subsequently signed the revised DTAA last year clearing the hurdle for the FTA.

A team of trade officials from the island nation was in New Delhi late September to finalise the scope of the pact — officially referred to as the Comprehensive Economic Cooperation and Partnership Agreement (CECPA) based on a feasibility study conducted by both sides.

“Negotiations are expected to begin full-fledged after the next meeting in November in Mauritius,” a government official told BusinessLine. The CECPA will include trade in goods, services as well as investment facilitation.

“Now that the DTAA has been signed and implemented the bitterness is behind us and the two countries are now ready to go ahead and finalise the CECPA,” the official said.

India is not expected to gain much in terms of market access for goods from the free trade pact as Mauritius is a very small market. However, in the area of services, especially tourism and hotels, there is a lot of scope, the official added.

“Mauritius also has trading arrangements and preferences with other countries and regions which Indian investors could take advantage of once the FTA is in place,” the official said.

Mauritius is also a beneficiary of the Generalised System of Preferences offered by Japan, Norway, Switzerland, the US, and the customs union of Belarus, Kazakhstan, and Russia. It is a FTA member of the Common Market for Southern and Eastern Africa and the Southern African Development Community. Apart from the economic gains, which could be limited compared to FTAs with larger countries, New Delhi is interested in a free trade pact with Mauritius as it shares a common cultural and historical past and there is a large Indian-origin population residing in the country.

“India views an FTA with Mauritius as a firm step in cementing the excellent relations that we have always shared with the country by increasing economic ties,” the official said.

The revised DTAA, which Mauritius was initially reluctant to sign, gives India the right to tax capital gains arising from sale or transfer of shares of an Indian company acquired by a Mauritian tax resident from April 1, 2017.

India’s exports to Mauritius in 2016-17 were $881 million which was a tiny fraction of the country’s total exports during the year pegged at $275.85 billion. It imported goods worth just $18 million from the country compared total imports of $384 million during the fiscal.

Published on October 12, 2017

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