As per the Department for Promotion of Industry and Internal trade (DPIIT), with Foreign direct investment from the nation increasing over three-fold to $3.7 billion in 2019-20. Cayman Islands has turned up to be the fifth largest investor in India. FDI from the Cayman Islands received for 2017-18 is worth 1.23 billion and one billion in 2018-19, which is UK Overseas Territory.
According to DPIIT data, FDI shot up to $1.23 billion in fiscal 2017-18 from just $71.03 million in fiscal 2016-17. FDI has shown a rise about three times in the last fiscal year from USD 296 million to USD 879 million. The data has revealed that Cayman Islands are not only ahead in terms of growth, but also within the absolute FDI terms. Due to the absence of direct taxes cost and easy to create funds, Cayman Islands has become one of the most preferred jurisdictions for routing investment and this is why the developed economies like France, Germany, and the UK are going after. The highest investor in India during the last financial year was Singapore, followed by Mauritius, Netherlands, and the US.
Nischal Arora, Partner regulatory, Nangia & Co LLP said, “In fact, 3 times year-on-year leap in FDI inflows from the Cayman Islands must be seen as an indicator of how this small offshore tax haven has risen as a preferred intermediate investment holding jurisdiction by investors across the globe rather than India achieving higher popularity as an Investment destination. Additionally, investments from tax havens do carry a comparatively higher perceived risk of laundered money, trip issues, etc, again, which is absolute to make the regulators wary of this new trend.”
The rapid investment in India has both the faces, on one side where it is a step towards Make In India and enhance the economy. Whereas the other side indicates the absence of substance requirements and the perceived lack of transparency obligations by the investment holding jurisdiction, such a rapid pace of investment is furthermore certain to worry the Indian regulators. In 2019-20, there has been an increase of 13 percent in FDI in India worth USD 50 billion, including reinvested earnings, FDI in FY20 grew 18% to $73.4 billion.
