Sun Sep 14 01:28:03 UTC 2025: Okay, here’s a summary of the text and a rewritten news article based on it:
**Summary:**
A recent analysis of Reserve Bank of India (RBI) data reveals a significant trend: Indian companies are increasingly using low-tax jurisdictions (tax havens) like Singapore, Mauritius, and the UAE to channel their foreign direct investments (FDI). In 2023-24, over half of India’s outward FDI went through these jurisdictions, and the trend has intensified in the current financial year. While governments globally are trying to curb profit shifting to tax havens, experts argue that for Indian companies, using these jurisdictions is often a strategic move, facilitating access to strategic investors, providing tax stability, and easing fund transfers. The use of these jurisdictions can also offer protection to the Indian parent company and be more attractive to foreign partners in joint ventures. Additionally, potential tariffs by countries like the U.S. could further incentivize Indian companies to establish foreign subsidiaries in low-tax jurisdictions to avoid these tariffs.
**News Article:**
**Indian Firms Increasingly Route Investments Through Tax Havens, RBI Data Shows**
**New Delhi – September 14, 2025** – A new analysis of Reserve Bank of India (RBI) data indicates a growing trend of Indian companies utilizing low-tax jurisdictions, often referred to as tax havens, to channel their outward foreign direct investment (FDI). The data, analyzed by *The Hindu*, reveals that nearly 56% of India’s outward FDI in 2023-24 was directed to countries such as Singapore, Mauritius, the UAE, the Netherlands, the United Kingdom, and Switzerland.
Out of ₹3,488.5 crore of outward FDI by India in 2023-24, about ₹1,946 crore went to these low tax jurisdictions. Singapore, Mauritius, and the UAE alone accounted for over 40% of India’s outward FDI during this period. The trend appears to be accelerating, with these jurisdictions accounting for 63% of India’s total outward FDI in the first quarter of the current financial year.
While global efforts are underway to clamp down on profit shifting to tax havens, experts emphasize that for Indian companies, this practice is not solely about tax evasion. Riaz Thingna, Partner at Grant Thornton Bharat, explained that using special purpose vehicles in jurisdictions like Singapore can attract strategic investors, improve tax positioning during stake dilution, and offer greater flexibility in fund transfers.
“These investments are often made because these jurisdictions form platforms for investment in third countries,” Thingna said.
Vaibhav Luthra, Tax Partner at EY India, added that these “tax efficient” jurisdictions provide tax stability, making them attractive for fund raising and investor participation. “Having an entity in the middle also protects the Indian parent company,” Luthra noted.
RBI data shows that the latest available data for July 2025, joint ventures accounted for almost 60% of the investments made by Indian companies in the low-tax jurisdictions.
Furthermore, experts suggest that potential trade tariffs imposed by the U.S. could further encourage Indian companies to establish subsidiaries in low-tax jurisdictions to avoid these tariffs.
“There could be a lot of companies who will set up subsidiaries and other entities outside India, where the value addition is done, and accordingly escape the harsher tariffs on India,” said Thingna.
The trend highlights the complex interplay between tax optimization, strategic investment decisions, and global trade dynamics for Indian businesses operating on an international scale.
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