A new era of cooperation starts with CECPA

Mauritius is a very important trade and investment partner for India. According to the latest figures published by the Department of Industrial Policy and Promotion of India, Mauritius topped the list regarding foreign direct investment (FDI) into India for the second consecutive year.

From April 2017 to March 2018, Mauritius has been the main provider of FDI into India,  accounting for more than $15.94 billion out of a total of $44.85 billion. Cumulative inflows from Mauritius, as at March 2018, amount to $127.57 billion; thus representing 34% of total inflows in USD terms into India.

In the financial year 2016 - 2017, India exported goods worth $883 million to Mauritius and imported goods worth $18 million from us. India’s exports to Mauritius comprise largely petroleum products, but also pharmaceuticals, cereals, cotton, electrical machinery, apparels and clothing accessories. The main items we export to India are iron and steel, garments, special sugar, rum, medical devices, processed tuna, optical, photographic and precision instruments.

Regarding engineering trade, in 2016, engineering exports from India to Mauritius increased by an impressive 41%, compared to 2015. Overall, engineering trade between the two countries increased to $87 million, realizing a growth of nearly 31% in comparison with the preceding year 2015.

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“The India-Mauritius relationship is one of the best that can exist between two countries for several reasons. Having about 65% of the Mauritian population of Indian origin, one could say is the main reason, especially when it comes to the closeness of our cultural ties. Having some kind of understanding that, given its size and importance on the world stage, India plays the bigger brother role also makes the relationship smoother as there is no competition. Commercially, India has played a huge role in the development of our offshore sector, even if not everybody in the Indian government was happy with the way the sector developed over the years; thus, there has been significant pressure to renegotiate the DTAA. For any long lasting relationship to stand, there should be, and rightly so, some level of reciprocity and it is important that the different parties are attractive to one another,” explained Vishal Nunkoo, CEO of Velogic.

$15.9 billionnof FDI intonIndia channelled through Mauritius,author:}}

South-South cooperation

For geopolitical perspective, Mauritius is of noteworthy interest to India. The country’s objective is to be one of the strongest powers in the Indian Ocean and the location of our territory, including the outer islands, makes us a valuable proposition. This, in some ways, makes our relationship more balanced. In addition, more often than not, Mauritius and India have stood on common positions on international issues, which further harmonized this strong relationship.

Recently, this good relationship was put to test following damning media reports on the Mauritian global business sector. On July 18, the Chief Executive of the Financial Services Commission (FSC) met with the Securities and Exchange Board of India (SEBI) in Mumbai. The Indian authorities gave the assurance that it is neither working on, nor contemplating to produce at its level, any list which will identify Mauritius as a high-risk jurisdiction.

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When we look at the balance of trade between our two countries, the surplus is significantly skewed towards India, that is, imports from the Indian subcontinent are exceeding our exports towards it. One of the reasons is that we do not have a comprehensive trade agreement and therefore there are barriers – both tariffs and non-tariffs – which hinder smooth movement of goods between the two countries. For a long time, the focus was on the renegotiation of the DTAA. Now that this issue has been finalized, the CECPA is being negotiated, which hopefully will make Mauritian products more attractive to the Indian market.

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Indeed after the signing of Double Taxation Avoidance Convention (DTAC) amendment Protocol, talks on CECPA begun in September 2016 and were expected to be concluded by the end of 2017. The fifth round of negotiations on the CECPA between the two countries was held last month. For Mauritius, the CECPA forms part of a network that is being put in place to develop partnership with Africa at regional, bilateral and continental levels as well as with other emerging countries such as India and China, in line to further enhancing South-South cooperation. The CECPA is yet to be finalized by December 2018.

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Need for enhanced visibility of Mauritius in India 

The conclusion of the CECPA is expected to lift the economic and trade relations between Mauritius and India to a higher level as well as provide an appropriate platform for both countries to jointly explore opportunities on the African market. Mauritius is indeed considered as a gateway to the Indian Ocean Region and to Africa. It can serve as a hub for Indian companies looking to access the African mainland.

Manoj Kuwar Dwivedi, the Indian Joint Secretary for Africa Division of the Department of Commerce, highlights that both Mauritius and India are exploring bilateral opportunities which will be beneficial to both countries in terms of trade in goods and services. “The two countries have their strengths and they will open avenues of opportunities for liberal trade relations. On one side, Mauritius will learn from a big consumer economy like India and, on the other hand, India will use Mauritius as a platform to reach out to French speaking African countries for investment,” he points out.

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The Indian Joint Secretary underlined that the negotiations are progressing in a satisfactory manner while adding that this fifth round of negotiations focus on the services sector. To this end, he expresses his optimism about fruitful discussions which will eventually lead both countries to have preferential market access in key areas of commercial interests.

“My feeling is that this process will be very challenging even if trade barriers are lowered and/or removed, mainly because India is much more industrialized than Mauritius and they produce more competitively than Mauritius, their level of costs not being as high as in Europe or the US, our main export markets. Our entrepreneurs will need to find the USPs of our products and I am of opinion that we need to focus more on quality than quantity to target the rapidly growing middle class. Additionally, there will be a need for enhanced visibility of Mauritius in India where we are known mainly as a tourism destination. Roadshows to promote Mauritian products and know-how will need to be organized more frequently, targeting the Indian business community,” he adds.

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As India and Mauritius prepare to embark on a new era of economic cooperation, there is definitely a feel-good factor.