Overseas flows into Indian capital markets originating from tax-haven Mauritius witnessed the sharpest decline, while Norway and Singapore gained favour in 2022-23 (FY23), stated Business Standard in a report, quoting data from the National Securities Depository (NSDL).
According to the report, the total assets under custody (AUC) from Mauritius declined nearly 42 percent to ₹6.66 lakh crore at the end of March 2023, from ₹10.88 lakh crore a year ago.
Experts told the market daily that the renegotiation of the India-Mauritius tax treaty and greater scrutiny of flows have dimmed the appeal of the island nation as a preferred destination for overseas capital flowing into India.
Norway and Singapore saw a 13 percent and 5 percent increase in AUC, respectively, during FY23 when the benchmark S&P BSE Sensex and the National Stock Exchange Nifty indices ended little changed, noted BS.
As per the report, Singapore now is the second biggest jurisdiction for foreign portfolio investor (FPI) flows after the US. Meanwhile, Mauritius’ ranking has dropped to 4 (from 2) at the end of 2021-22.
“Besides Singapore, Mauritius will also face tough competition from Gift City, where investment rules are being liberalised. However, Mauritius won’t concede the turf so easily. It is strengthening its variable capital company (VCC) regime and further improving anti-money laundering standards to remain a preferred jurisdiction amongst investors that set up their shop,” said Neha Malviya Kulkarni, chief growth officer, SuperNAV, an international fund set-up advisory.
Overall, FPI AUC fell 4.44 percent in FY23, off the backs of asset price depreciation and capital outflows of over ₹35,000 crore, it added.
Overall, in 2023 YTD, FPIs have sold Indian equities worth ₹23,844 crore. They recorded steep outflows worth ₹28,852 in January, the highest in 7 months, however, it moderated in February before turning positive in March. In Feb, FPIs sold Indian equities worth ₹5,294 crore.
In the previous year, 2022, FPI outflow was recorded at ₹1.21 lakh crore, the highest-ever yearly outflow. In 2022, FPIs were net buyers in only 4 of the 12 months of the year – July, August, November and December. Before this, the highest recorded outflow was in 2008 amid the global financial crisis, when foreign investors sold Indian equities worth ₹53,000 crore.
