FIIs route funds to India via US
India’s double taxation avoidance treaty with Mauritius made fund managers operate out of Mauritius
By : bijith r.
Update: 2014-11-04 23:43 GMT
MUMBAI: The US has replaced Mauritius as the number one destination for fund managers to route their investment into the Indian equity and debt markets.According to industry participants, the controversies surrounding India’s double taxation avoidance treaty with Mauritius made some of the fund managers operating out of Mauritius to re-structure themselves and explore other jurisdictions.
The total assets under custody (AuC) of fund managers operating out of the US stood at Rs 6.34 lakh crore as on September 30, 2014 as compared to Rs 4.45 lakh crore worth of portfolios held by Mauritius based entities,” according to data available with the National Securities Depositories Ltd (NSDL).“Mauritius has also started putting certain conditions for operating from its territory. To avoid any risk at a later stage, some of the fund managers have been exploring other jurisdictions over Mauritius,” said Kishore Joshi, senior associate, Nishith Desai Associates.
Till 2013, Mauritius was the top choice for global fund managers seeking to invest in the Indian markets. As on December 30, 2012, Mauritius topped the chart with total AuC worth Rs3.51 lakh crore as compared to 3.42 lakh crores of assets held by the US based funds.According to Vipul Dalal, an independent wealth and corporate strategist, the flow of funds from US would increase at a steady pace as there is a greater flow of positive news in the US about India. ‘In the equity markets, India is receiving investments from all categories of investors based out of the US and other jurisdictions,” he added.