India Inc must invest more in Mauritius

Anil Kumar Kanungo | Updated on July 09, 2012 Published on July 09, 2012

Mauritius is a land of opportunities for Indian industry.

Mauritius is a land of opportunities for Indian industry.

The visit of Dr Arvind Boolell, the Mauritius Minister of Foreign Affairs, Regional Integration and International Trade, to India last week, may have been of some interest to Indian industry. For a country which largely depends on imports of a variety of products and services for its domestic market, Mauritius offers a huge opportunity for Indian companies.

An analysis of Mauritius’ imports suggests that the country practically imports everything and its domestic industry is uncompetitive in most manufacturing sectors. Imports, therefore, are huge and diversified, and include cotton, cotton yarn, textiles, pharmaceutical products, electrical machinery, woven apparel, health products, petroleum products, plastic, fish and processed food products, spices, coffee, tea, salt, sulphur, etc. Similarly, in the services sector, it requires a number of professional services such as technical education, hotel and tourism services, healthcare facilities, IT services, accountancy, banking and engineering services.

MSMEs hold the key

The opportunity for India therefore lies in its MSMEs (micro-, small and medium enterprises). A large number of product requirements can be tapped as India enjoys comparative advantage in some of the sectors. Gradual liberalisation of investment procedures and ease of doing business in the island is further attracting foreign investors to invest in Mauritius.

For instance, taxes have been capped at 15 per cent for corporates as well as for individuals. Access to Mauritius has been liberalised for professionals. Professionals can easily live in Mauritius if they work in the country, and investors can settle down there.

Mauritius has a comparative disadvantage in pharmaceutical products, textile, leather and cork products, besides others. There is a tendency to import these products in general. Since one of its traditional export sectors has been clothing, and given that the textile sector there is not so well developed, it is important for Mauritius to import textile products at a cheaper price to satisfy export demands.

Most of the textile imports are currently from China and, to some extent, from South Africa. But this is where Indian exporters and investors should take advantage, because the Indian textile and apparel industry is globally competitive and Mauritius is a neighbourly and familiar terrain for India.

Development of the chemical industry and prepared food provides a huge opportunity for India. Indian players can participate in some niche businesses offered by the domestic market in Mauritius. Hotel and tourism industry is on the rise and needs outside investors.

Though the Taj and the Oberoi have already made forays into its market, new investors from Singapore, Malaysia and China are also eyeing it. Apollo and Fortis are ready to set up hospitals in Mauritius. Educational institutions such as NIFT and BITS Pilani are exploring the possibility of opening up centres there.

The Indian education industry has lot of scope to operate in the island either through wholly owned subsidiary or joint venture route. This is more so, when Indian professionals have already established their capability as Mauritian teachers of Indian origin.

Besides, Mauritius has been a tried-and-tested route for FDI into India. Indian corporates can have easier access to African markets through Mauritius. It offers access to Indian MSMEs and the market has been relatively untapped till now.

Doing business in the island

To top it all, Mauritius as a destination has earned a lot of credit. According to the Transparency International Corruption Perceptions Index, it has high governance standard, with a ranking of 46 last year. It is also the top-ranked African country with regard to business climate, ranked 23rd globally in the 2011 World Bank Doing Business report. The country is ranked high in terms of competitiveness, investment climate and governance.

The World Economic Forum’s global competitiveness index placed Mauritius at 54 out of 133 countries in 2011-2012, behind only South Africa in the Africa Region. It topped the 2011 Mo Ibrahim Index of African Governance, and is ranked 36 in the AT Kearney Global Services Location Index 2011. Another big advantage is that it takes only three days to set up a company on the island and one doesn’t require a Mauritian partner to start a business. This dramatically reduces the cost of running a business.

All this suggests there is a future for Indian industry in Mauritius. Taking advantage of cultural, political and long-standing friendly relations between the two countries, Indian investments can soar.

Current Indian investments in Mauritius were $13.56 million till December, which is substantially low. It’s time for Indian industry to look at Mauritius as a favourable destination.

(The author is Editor, Indian Institute of Foreign Trade, New Delhi.)

Published on July 09, 2012
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