Over US$3 billion flow into India from Mauritius every year.
It is the largest provider of foreign direct investment to India. Created as a
tax haven and millionaire’s paradise with some of the best resorts and
facilities in the world (like the Oberoi’s), Indian investment and managers are
reportedly largely responsible for its prosperity.
At the same time, Mauritius is very important to India
strategically. India has a satellites tracking station and base here. We also
use Mauritius as a base for getting to Antarctica. It is one of India’s
strongest allies and has always supported India’s case for a permanent seat in
the Security Council. Currently Mauritius is receiving over $100 million in aid
from India to build a dazzling IT city. India’s spheres of influence are
limited but Mauritius is one of them. This is not surprising — over 50% of its
people are of Indian origin. However, it has its share of problems.
The French influence here is very strong even as there is a
French Naval base at the Reunion Islands and a powerful British American
nuclear military presence in Diego Garcia , 1200 miles North. The French
influence throughout the neighbouring Africa — Madagascar and other countries
— is very strong. The strongest military and economic presence south of Mauritius
is South Africa’s. Mr K Subramaniam, the well-known defence expert,
acknowledges the superpower presence of America as the predominant naval
presence here, with the creation of the Fifth Fleet, earmarked for a permanent
place in the Indian Ocean. It was created during the cold war to strike deep
into southern Soviet Union with a nuclear arsenal. Today it is being used to
support its military efforts in Africa, the Gulf, Afghanistan and other parts
of Asia.
Mauritius lays peaceful claim to the Chagos Archipelago
exemplifying the clash between the developing and developed world. Indian naval
ships visit Mauritius often. Mauritian ships visit India for training. Mauritius
is the largest and most important of all the Indian Ocean Island littoral
States, like the Maldives, Seychelles, Comoros and Reunion, and has very strong
relations with India. Indian naval influence here is not as much as it could
be. The Indian navy doesn’t seem to look beyond the Andamans as far as bases
are concerned, as opposed to the global strategy of America and Britain.
According to Mr Gurjit Singh former joint secretary, Africa
Division, the ministry of external affairs, Mauritius is very important for
India — and we are reassessing its strategic importance , especially as it is
the Indian equivalent of the Bahamas.
Among the top ten investing companies of Mauritius in India
are CEPA Investment (US$788.73 million) and AT&T Cellular (US $373
million). India exports $162.16 million worth of goods to Mauritius and imports
just $3.26 million worth of goods from it. The Mauritian rupee is linked to the
euro, and is stronger than the Indian rupee.
However, Mr Dev Chumroo, the director of the Board of
Investment, Mauritius, insists that in the issue of the Double Tax Avoidance
Agreement and the case of ITO vs The Union of India in the Supreme Court, the
problem is entirely on the Indian side.
This treaty remains the most controversial aspect of
relations between the two countries and one wonders why it is not cleared up.
Obviously vested interests are high. India has such DTA treaties with other
countries like Austria; so does Mauritius. Why has only this one run into so
much flak? Given the quantum of investment, India could:
l Continue with the treaty with Mauritius by increasing
investment coming in from here, but ensuring that transparency, anti-corruption
laws and legalities are adhered to;
l Give it less importance; reduce levels of investment,
increasing FDI from other countries and maintaining much stronger checks and transparency;
l Scrap it and scrutinise and change its own laws so that it
is possible to generate foreign investment within India so that FDI is not
required.
It seems disproportionate to its importance that so much
money should be coming into India from a country like Mauritius, causing
surprise and instability on either side. The view of Mauritius from India and
India from Mauritius are substantially different. We should probably follow a
combination of all three options, starting with the first one, going on to the
second if that doesn’t work, and ideally, staying with option three.
The safety of Indian investments in Mauritius is always a
question mark especially since the distrust of India runs deep among the
general population. As a senior Mauritian official protested, “ We are
Mauritians, not Indians. I do not like the Indian High Commissioner (who is an
important figure) — he should mind his own business. (He is too interfering in
our affairs)”.