TAX HEAVEN COUNTRIES AND INDIA
About 60% of India's outward FDI in 2024-25 went to low-tax jurisdictions, commonly called "tax havens," such as Singapore, Mauritius, UAE, Netherlands, UK, and Switzerland.
Key Insights
- Nearly 56% of India's foreign direct investments in 2024-25 were routed through these tax havens, with the rest going to standard destinations or "other low-tax countries" as per RBI data[1].
- Indian companies use these jurisdictions strategically—not just for tax savings but to improve global presence, ease of operations, and investment structure flexibility.
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accounted for the bulk of tax haven FDI destinations.
- Investment through tax havens allows easier cross-border movement of funds and greater protection from regulatory risks and tariff wars.
Expert Views and Rationale
- Experts say outward FDI to tax havens is often a strategic choice, not just for evading taxes but for better efficiency, ease in fund movement, and legal protections.
- Tax havens also provide shelter from changing tariffs and regulatory measures between countries.
- Indian companies may use holding structures in tax havens to route investments onwards to final operating countries or maintain financial flexibility.
RBI Data Snapshots (2024-25)
| Jurisdiction | Share of Outward FDI (%) |
|-----------------|-------------------------|
Summary Table
- About 56% of India's outward FDI went to low-tax jurisdictions ("tax havens") in 2024-25.
- The move is driven by operational ease, global expansion, and tax and regulatory protections.
- The RBI expects this trend to continue as companies adapt to global business environments and regulatory frameworks.
SOURCE THE HINDU
