Daijiworld Media Network – New Delhi

New Delhi, Sep 14: Indian companies are increasingly using low-tax jurisdictions to expand overseas, with 56% of outward foreign direct investment (FDI) in 2023-24 flowing to hubs such as Singapore, Mauritius, the UAE, the Netherlands, the UK, and Switzerland, according to Reserve Bank of India (RBI) data analysed by The Hindu.

Out of a total outward FDI of Rs 3,488.5 crore, about Rs 1,946 crore went to these destinations. Singapore alone accounted for 22.6%, followed by Mauritius (10.9%) and the UAE (9.1%). The trend strengthened in the first quarter of the current fiscal, when low-tax hubs drew 63% of India’s outward FDI.

Experts say the choice is driven by strategy as much as tax benefits. “Setting up a subsidiary through Singapore or a similar jurisdiction helps in attracting strategic investors and offers better tax positioning,” noted Riaz Thingna, Partner, Grant Thornton Bharat. He added that these locations provide flexibility for fund transfers and joint ventures.

Vaibhav Luthra, Tax Partner at EY India, explained that the RBI data reflects only the first-level destination. “Investors prefer intermediate jurisdictions for fund-raising and legal protection,” he said.

RBI figures for July 2025 show nearly 60% of Indian investments in low-tax hubs were for joint ventures, underscoring their role as springboards to other markets. Analysts also caution that rising U.S. tariffs on Indian imports may further push firms to set up overseas units to avoid trade barriers.