In­dia, Mau­ri­tius back to ne­go­ti­at­ing free trade pact

The Hindu Business Line - - NEWS - AMITI SEN

“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.”

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.

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