India is the pharmacy of the world and a global destination for its traditional medical system which is highly valued in my country,” said Mauritius Prime Minister Pravind Kumar Jugnauth at the launch of the World Health Organization (WHO) Global Centre for Traditional Medicine (GCTM) in Jamnagar, Gujarat, on April 19.
“India and Mauritius are united by history, ancestry, culture, language and the shared waters of the Indian Ocean and I am in India to deepen the robust development partnership that has emerged as a key pillar of our close bilateral ties, “ he added. On an eight-day visit to India, Jugnauth participated in the groundbreaking ceremony of the WHOGlobal Centre in Jamnagar as well as in the Global Ayush Investment and Innovation Summit in Gandhinagar, along with Prime Minister Narendra Modi. Apart from his official engagements in Gujarat and New Delhi, he also paid a visit to Varanasi.
The list of the positives in bilateral relations between India and Mauritius is long. Apart from frequent high-level interactions, it includes several agreements on trade and maritime security, lines of credit for infrastructure, joint patrol and surveillance operations in the EEZ.
In the backdrop of the conflict in Ukraine and its possible impact on the Indo-Pacific and the Indian Ocean, the visit acquired an added significance.
Mauritius is one of India’s key maritime neighbours in the Indian Ocean and occupies a special place in the Prime Minister’s vision of SAGAR’ (Security and Growth for All in the Region). The stage for this week’s visit was set by India’s External Affairs Minister S Jaishankar’s visit to Mauritius during which India offered a special $100 million defence Line of Credit to enable the procurement of defence assets from India The two sides also signed an agreement which will provide for a Dornier aircraft and an Advanced Light Helicopter Dhruv on lease to Mauritius on a gratis basis for two years, helping shore up its capabilities to patrol and monitor its extensive maritime domain more effectively.
A Comprehensive Economic Cooperation and Partnership Agreement (CECPA) with Mauritius was India’s first such agreement with an African country It enabled Indian investors to use Mauritius as a launch pad for business expansion into continental Africa helping the prospect of Mauritius emerging as a hub of Africa. The joint statement issued after the visit said that “these initiatives underline once again that the security of Mauritius is the security of India; in the prosperity of Mauritius is our prosperity.”
Earlier in January Modi and Jugnauth had jointly inaugurated the India-assisted social housing project in Mauritius virtually. They also launched the Civil Service College and 8MW solar PV farm project in Mauritius that is being undertaken under India’s development support.
Sources said that the issue of the Chagos Archipelago, whose sovereignty has been a point of contention between Mauritius and the United Kingdom, came up during Jugnauth’s meeting with Modi during the recent visit. Coincidentally, the UK Prime Minister Boris Johnson also visited Gujarat last week to meet Indian businessmen and had a meeting with PM Modi when Juganath was in the national Capital.
India has supported Mauritius on the issue. In May 2019, India was one of the 116 countries that supported Mauritius by voting in favour of a UN General Assembly resolution stating that the UK is “under an obligation to bring to an end its administration of the Chagos Archipelago.” Almost four years on, the UK has still not done so.
As a fellow developing postcolonial nation, India is cognisant of the unique circumstances and challenges Mauritius faces in its pursuit of development. It has demonstrated its capabilities and willingness to assist it in dealing with common maritime and developmental challenges—largely in the form of robust trade, investments, and defence partnerships.
While the Chinese threat in the Indian Ocean makes Mauritius strategically important for it, India has traditionally enjoyed close, multi-faceted bilateral and multilateral ties with it.
Though diplomatic relations between India and Mauritius were established in 1948, Mauritius maintained contacts with India through successive Dutch, French and British occupations.
From the 1820s, Indian workers started coming to Mauritius to work on sugar plantations. From 1834, when slavery was abolished by British Parliament, a large number of Indian workers began to be brought to Mauritius as indentured labourers.
The cultural affinities and long historical ties between the two nations have contributed to strong and cordial relations between the two nations. More than 68% of the Mauritian population are of Indian origin, most commonly known as Indo-Mauritians..
Aiming to shed ‘tax haven’ image
For three decades, Mauritius positioned itself as the low-tax jurisdiction of choice for international businesses investing in Africa and Asia, particularly India.
In the past five years, however, there has been an overhaul of the island nation’s tax laws. Sensitive to pressure from international regulators demanding greater scrutiny of offshore centres, Mauritius has dropped several elements of its previous tax system to overturn its image as a tax haven In October, it backed an international agreement to introduce a global minimum effective corporate tax rate and force multinationals to declare profits and pay more tax in the countries where they carry out business.
Mauritius’ efforts to reinvent itself have been boosted by other measures, too. In October, the Financial Action Task Force, the global money laundering watchdog, removed the island from its list of jurisdictions under increased monitoring. In January, the EU similarly took Mauritius off its list of countries needing close monitoring for money laundering and terrorism financing. According to official Indian data, there has also been a substantial drop in inflows of foreign direct investment to India from Mauritius since a change to a double-tax treaty between the two countries, in 2017.
Tax advisers in Mauritius corroborate the data. That treaty allowed Mauritius-based companies to avoid paying Indian capital gains tax when they sold Indian assets. It led to a boom in multinationals seeking to enter the Indian market, routing funds via Mauritius. But, having been top of the list of countries making FDI into India, in 2020-21 Mauritius dropped to third, after Singapore and the US. Its inflows fell nearly 32 per cent to $5.6bn, compared with $8.2bn in 2019- 2020.
Some have expressed concern that, without some of these low-tax attractions, businesses will leave Mauritius. However, others are more sanguine.
“There has been a flight” of some businesses, says Caoilfhionn van der Walt, managing partner of an Africa-focused international tax and financial planning company, with offices in Mauritius and South Africa. “But it’s the kind of business that Mauritius doesn’t want anyway,” he says