Mauritius has long been considered one of the most attractive destinations for Indian investors. For decades, Indian businesses and high-net-worth individuals have looked at Mauritius not only as a gateway for international trade and investment but also as a jurisdiction that offers predictability, stability, and regulatory clarity.
But in 2025, the investment landscape is evolving. New FEMA regulations, tighter ODI frameworks, changes to the India – Mauritius tax treaty, and enhanced economic substance requirements in Mauritius mean that the playbook has changed.
We are often asked: “Does Mauritius still make sense for Indian residents?” The short answer is yes – but only if the structure is set up carefully, with the right compliance, purpose, and planning.
Let’s break down what the future of Mauritius investments looks like for Indian resident:-
A) Policy Shifts: From Loopholes to Substance
The regulatory environment on both sides has shifted.
- India’s ODI Framework (2022 onwards): The Reserve Bank of India consolidated overseas investment rules into a single framework, clearly distinguishing between Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI). Banks are now required to verify the bona fide business intent of every overseas investment. This means investors must demonstrate purpose and provide a proper paper trail.
- Mauritius’ Global Business Environment: Mauritius itself has moved away from paper entities. Today, Global Business Companies (GBCs) must show real economic substance – board members in Mauritius, local expenditure, a management company, and audited accounts. A Mauritius company now needs to look and act like a business, not just a mailbox.
Mauritius will remain attractive, but investors must budget for substance and compliance. Thin – paper setups will no longer survive scrutiny.
B) The India – Mauritius Tax Treaty: Guardrails but Opportunities
The India – Mauritius tax treaty was once the main driver of investments. After the 2016 protocol, India gained the right to tax capital gains on shares acquired on or after April 1, 2017. More recently, the 2024 Protocol added a Principal Purpose Test (PPT) to curb treaty abuse.
What does this mean in practice?
- If you are using Mauritius purely for tax benefits, you will fail the PPT.
- If Mauritius serves a genuine business reason – such as pooling investors, accessing Africa, or creating a neutral holding structure – you can still benefit.
Tax arbitrage is gone. Treaty use is still available, but it must be backed by commercial justification.
C) LRS, ODI and Capital Flow Planning
For Indian residents, the main routes into Mauritius are:
- Liberalized Remittance Scheme (LRS): Individuals can remit up to USD 2,50,000 per financial year for investments, subject to conditions.
- Overseas Direct Investment (ODI): Indian entities can invest up to 400% of net worth, subject to sectoral caps and compliance.
This means:
- Individuals must carefully time their remittances and watch for changing rules. For example, recent proposals suggest curbs on offshore time deposits under LRS, though equity and business investments will continue to be allowed.
- Companies must plan their financial commitments, ensure the Mauritius entity has a clear business case, and file all ODI forms and annual performance reports (APRs) accurately.
Capital flows will remain open but more tightly monitored. Investors should expect banks to demand detailed documentation.
D) Round-Tripping: Still a Red Flag
One of the biggest challenges is round-tripping – when Indian money flows to Mauritius and comes back into India.
The RBI views such structures with suspicion. Any Mauritius entity making downstream investments into India will trigger enhanced due diligence. Unless you can prove commercial rationale (say, pooling global investors into an India-focused fund), banks may block the transaction.
Avoid India-facing loops unless absolutely necessary and fully justified. Mauritius will be best used for non-India business expansion, not to reinvest back into India.
E) Why Mauritius Still Works for Indians (If Done Right)
Even with stricter rules, Mauritius continues to offer:
- Stable regulation: The Financial Services Commission (FSC) ensures transparency and global compliance.
- Efficient incorporation: Setting up a GBC is straightforward, provided substance requirements are met.
- Attractive tax regime: Mauritius offers partial exemptions on certain income streams, subject to substance.
- Strategic location: It remains a preferred hub for Africa and Asia-focused businesses.
- Reputation recovery: Mauritius has exited international grey lists by strengthening AML/CFT frameworks, making it safer for long-term investors.
Mauritius will remain viable for investors who are willing to do things properly, with genuine operations and compliance.
F) Common Structures Indian Residents Use in Mauritius
- Holding Companies (GBCs): Ideal for owning global assets or consolidating investments outside India. Must meet substance tests.
- Special Purpose Vehicles (SPVs): Used for joint ventures, project-specific investments, or global partnerships.
- Fund Participation: Mauritius continues to be a preferred base for private equity and venture capital funds, attracting Indian investors through LRS/ODI routes.
G) Compliance Roadmap for 2025
Guiding clients through the following steps:
- Incorporation – From obtaining legal certificates to name reservation.
- Bank account opening
Banks will act as gatekeepers. Even if RBI permits, your AD bank will only allow the investment if your documentation is watertight.
H) The Road Ahead
Looking at 2025 and beyond, Mauritius will continue to be an important destination for Indian residents – but in a different way than before.
- No shortcuts: Only genuine, compliant structures will work.
- Bank scrutiny: Expect higher documentation demands from your bank.
- Business first, tax second: The PPT makes commercial rationale the deciding factor.
- Costs of compliance: Be prepared for annual audit, management company fees, and board-level substance.
I) Conclusion
Mauritius remains strategically relevant for Indian investors. It is no longer about tax arbitrage – it is about global reach, business structuring, and regulatory credibility.
For Indian residents, the opportunity lies in using Mauritius to expand internationally, consolidate assets, and access new markets. But success depends on compliance discipline and professional guidance.
The bottom line: Mauritius is still open for business – but only for those who do it right.
