India’s Outward FDI Trends: Tax Havens and Strategic Imports

• Indian companies are increasingly utilizing low-tax jurisdictions abroad to increase their global presence.

• An analysis by The Hindu of data from the Reserve Bank of India (RBI) shows that nearly 56% of outward FDI in 2024-25 was in low tax jurisdictions such as Singapore, Mauritius, UAE, Netherlands, UK, and Switzerland.

• Out of the total ₹3,488.5 crore of outward FDI by India in 2024-25, about ₹1,946 crore went to these low tax jurisdictions.

• Singapore (22.6%), Mauritius (10.9%), and the UAE (9.1%) accounted for more than 40% of India’s outward FDI in 2024-25.

• This trend has increased in intensity in the current financial year, with these low tax jurisdictions accounted for 63% of India’s total outward FDI in the first quarter.

• Experts argue that choosing these low tax jurisdictions is not just a tax issue but also a strategic imperative for Indian companies.

• Low-tax jurisdictions provide a tax advantage, tax stability, and other advantages for Indian companies looking to invest abroad.

• Foreign companies often choose a low-tax jurisdiction to form a joint venture rather than in India due to FDI regulations, taxation, and other elements.

• The latest available data for July 2025 shows that joint ventures accounted for almost 60% of the investments made by Indian companies in the low-tax jurisdictions.

India Outward FDI is important topic for Civil service exam (WBCS).

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