By Meenakshi Saxena
Executive Director at AMG Group
India and Mauritius signed the Comprehensive Economic Cooperation and Partnership Agreement (CECPA) on February 22 2021, which came into effect on April 1, 2021. The CECPA is a trade agreement that seeks to enhance economic cooperation, lower trade barriers, and deepen economic ties between India and Mauritius. It offers a framework for the two trading partners to cut down customs duties on a range of products as well as ease existing standards to boost service trade.
Both countries have enjoyed strong trade and economic relations due to various factors, such as historical links and investments. An important aspect ushering into the historical agreement hinges on the fact that Mauritius has often served as a gateway for foreign investments into India due to its favourable tax treaty with India, which has made it an appealing destination for investors looking to benefit from India’s growth. These tax agreements, also known as the Double Taxation Avoidance Agreement (DTAA), have played a key role in facilitating economic cooperation between the two countries.
India, as one of the fastest-growing economies, offers a significant opportunity to Mauritian businesses, giving access to a market of more than 1.4 billion people. The CECPA is the first trade agreement that India has signed with an African country.
In a nutshell, the agreement cover covers Trade in Goods, Rules of origin, Sanitary and phytosanitary measures, Technical barriers to Trade, Trade in services and Dispute Settlement, Institutional and Final provisions and General Economic Cooperation.
Under the chapter on trade in goods, Mauritian exporters will enjoy preferential market access on a list of 615 products and India will get preferential market access for its 310 products. Some are duty-free and some have lower duties. The whole list is available on the MIFC website. Some examples are Sugar, Tea, Spices, medical devices, Beer, Rum, Fruit wine, garments, wooden furniture, parts of motor vehicles, ayurvedic products, and soap among others.
On the services front, both countries offer market access to more than 100 subsectors such as insurance and insurance-related services, banking, educational, health services and other financial services, telecommunication, professional services like accounting, auditing, architectural services, engineering, translation and interpretation services.
Another important benefit under CECPA is that it provides flexible rules of origin for several products. This is a crucial provision, as it allows the use of non-originating materials to a certain percentage of the export price and product-specific rules, which allow up to 35 percent value addition. This provision is especially relevant in the context of the value chain if it wants to take advantage of the huge African market.
CECPA also includes a framework to deal with any non-tariff barriers, sanitary and phytosanitary measures, technical barriers to trade and trade facilitation measures. The agreement also has provisions to support customs procedures to be applied in a consistent, transparent and fair manner to facilitate trade.
The agreement also offers a framework to conclude bilateral agreements on the recognition of qualifications, licenses and registration of business in areas of mutual interest.
Mauritius boasts of several attributes that enhance its attractiveness as a jurisdiction where among many it is one of the best places to invest in Africa. Democratic principles, rule of law, political stability, climate and lifestyle create a conducive business environment for investors. Mauritius is ranked 1st in Africa and 13th globally in the World Bank Ease of Doing Business ranking in 2020.
As a jurisdiction, Mauritius gains a lot from the CECPA with privileged market access into India. Some important points to be considered and discussed between both parties are; This agreement does not apply to any direct taxation measure and affects the rights and obligations of either country under any tax convention, Regular monitoring and ensuring compliance with the CECPA’s provisions by all parties is essential. This requires ongoing cooperation and information-sharing among participating countries and CECPA to comply with new laws on data protection in respect of services.
To get the preferential benefits under the CECPA, Indian exporters need a Certificate of Origin (CoO) from the Indian agencies that are authorised to issue the same, which can be applied online on the common digital platform of the Directorate General of Foreign Trade (DGFT), Department of Commerce.
Overall, the CECPA is a great initiative that stimulates economic growth having the potential to usher in job creation, higher incomes, and improved living standards. CECPA facilitates smooth trade, and tourism opportunities and promotes foreign direct investment (FDI) in both countries with legal certainty. In such a short span of time, both countries have witnessed remarkable growth in the export/import of several products and services.
About The Author
Executive Director at AMG Group Meenakshi Saxena writes on the opportunities offered by CEPCA and its implications for both India and Mauritius exclusively on Platform Africa. In this Opinion article, Meenakshi argues on the various win-win benefits offered by CEPCA spurring economic growth, generating productive capacity in terms of job creation, and helping enhance the standard of living.
Meenakshi boasts of a rich and diverse experience having worked in different countries across jurisdictions, demonstrating her adaptability and willingness to explore various career paths.
She now specializes in the offshore financial services industry, being associated with the AMG Group as an Executive Director and having additional responsibility under International Legal and Compliance. Meenakshi serves as a Director on several client companies. A law graduate from India her consistent achievement of gold medals throughout her educational journey reflects her dedication and excellence in academics.
Well said Ms Saxena !
Thank you Thierry 😁👍🏻
Thank you Mr. Adolphe 😁👍🏻