India and Mauritius have signed a Comprehensive Economic Cooperation and Partnership Agreement (CECPA) that provides an institutional mechanism to encourage and improve trade between the two countries.

India decided to change its trading relationship with Mauritius after it found that the earlier double taxation avoidance (DTA) treaty with the island nation was being misused for routing illegal money into India.

S Jaishankar
Indian foreign minister S Jaishankar.

In fact, tax advantage that India gave made Mauritius the supplier of largest foreign direct investment into the country. Even since then, various loopholes in the earlier trading system have been plugged.

The new CECPA was signed by Indian Commerce secretary Anup Wadhawan and Ambassador Haymandoyal Dillum, Secretary of Foreign Affairs, Regional Integration and International Trade, Government of Mauritius in Port Louis on Monday in the presence of Prime Minister of Mauritius and Indian External Affairs Minister S. Jaishankar.

CECPA is the first trade agreement signed by India with a country in Africa. The pact is a limited agreement, which will cover Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Financial services, Customs Procedures and Cooperation in other Areas.

The trade agreement provides for an institutional mechanism to encourage and improve trade between the two countries. The CECPA between India and Mauritius covers 310 export items for India, including food stuff and beverages (80 lines), agricultural products (25 lines), textile and textile articles (27 lines), base metals and articles thereof (32 lines), electricals and electronic item (13 lines), plastics and chemicals (20 lines), wood and articles thereof (15 lines), and others.

Mauritius will benefit from preferential market access into India for its 615 products

Mauritius
A small fishing boat cruises along the East coast of Mauritius near Ile aux Cerfs which has one of the most picturesque and spectacular beaches on the Indian Ocean island.Reuters

Mauritius will benefit from preferential market access into India for its 615 products, including frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment, and apparel.

As regards trade in services, Indian service providers will have access to around 115 sub-sectors from the 11 broad service sectors, such as professional services, computer-related services, research & development, other business services, telecommunication, construction, distribution, education, environmental, financial, tourism & travel related, recreational, yoga, audio-visual services, and transport services.

India has offered around 95 sub-sectors from the 11 broad services sectors, including professional services, R&D, other business services, telecommunication, financial, distribution, higher education, environmental, health, tourism and travel-related services, recreational services and transport services.

Both sides have also agreed to negotiate an Automatic Trigger Safeguard Mechanism (ATSM) for a limited number of highly sensitive products within two years of the signing of the agreement.

The agreement will come into force at an early date.