Indian corporations are more and more using low-tax jurisdictions abroad to information overseas investments to extend their world presence, not simply knowledge, in line with tax and funding specialists.
Evaluation by Hindus Information from the Reserve Financial institution of India, which intently tracks outward investments by Indian corporations, reveals that nearly 56% of such investments in 2023-24 had been in low-tax jurisdictions (generally known as tax havens) resembling Singapore, Mauritius, the United Arab Emirates, the Netherlands, the UK, the UK and Swatzerland.
In different phrases, of the overall £3,488.5 crore of overseas direct funding (FDI) by India from 2023-24, round 1,946 crore was spent in these low-tax jurisdictions.
The truth is, solely three nations, Singapore (22.6%), Mauritius (10.9%) and UAE (9.1%) accounted for greater than 40% of India’s outward FDI in 2023-24.
Moreover, this pattern seems to be growing intensities this 12 months. Within the first quarter, these low tax jurisdictions accounted for 63% of India’s complete outward FDI.
Nonetheless, nations world wide, together with India, are attempting to crack down on the traits of corporations shifting income in direction of these tax havens, however specialists stated selecting these low-tax jurisdictions can be a strategic issue for Indian corporations, not only a tax situation.
“If Indian corporations are investing outdoors of India, it makes a number of sense to have them by way of an organization arrange in one among these jurisdictions,” in line with Riaz Thingna, accomplice at Grant Thornton Bharat.
He stated that if an Indian firm is attempting to determine a subsidiary in Europe, the US or one other nation, doing it by way of a particular objective automobile in Singapore or related jurisdiction will assist appeal to strategic traders and supply higher tax positioning when stake dilution.
“These jurisdictions are extra versatile in transferring funds and investments every day,” Thingna defined. So, fairly often, these investments are usually not made solely to keep away from, keep away from, or cut back taxes. These jurisdictions are sometimes created to type a platform for funding in third nations. ”
First stage
Vaibhav Luthra, tax accomplice at EY India, additionally defined that RBI knowledge doesn’t present a ultimate funding, however solely reveals the primary stage of outward investments.
Based on Luthra, these low-tax or “tax-efficient” jurisdictions not solely present tax benefits, but additionally present tax stability. Other than this, in addition they supply different advantages for Indian corporations seeking to make investments overseas.
“In lots of circumstances, like fundraising and traders, they normally like to come back to those intermediate jurisdictions,” he defined. Having a central entity additionally protects the Indian guardian firm. ”
Thingna additionally identified that traits in overseas corporations would select low tax jurisdiction, which might type joint ventures fairly than India.
“If an Indian firm is in search of a strategic accomplice, strategic companions from every other nation will make them happier to spend money on Singapore entities, or related jurisdictions, or related jurisdictions, resulting from FDI laws, taxation and numerous different components,” Thingna defined.
RBI knowledge additionally refers to this pattern. Information from July 2025 reveals that the most recent knowledge on outward investments accounts for nearly 60% of investments made by Indian corporations in low tax jurisdictions.
Customs Outcomes
Thingna additionally believed that the excessive tariffs imposed by the US on imports from India may induce Indian corporations to speculate overseas in the event that they proceed.
“There might be many corporations outdoors India who will set up subsidiaries and different entities as a way to have added worth and keep away from India’s stricter tariffs accordingly,” he stated. “This hasn’t occurred but, as tariffs are latest, however it could occur.”
Revealed – September 14th, 2025 06:58 on
