Indian banks opening more branches in tax havens

Indian banks open 55 branches in tax-friendly states.

Indian media says 55 of the 100 international branches of Indian banks are in well-known tax havens. These tax havens have been identified as Singapore, Hong Kong, the United ArabEmirates, the Mauritius and United Kingdom-controlled provinces.

In contrast, only three bank branches have been opened in the USA and China, India’s two largest trading partners. Even the Fiji Islands and Kenya have more Indian banks branches than the USA and China

Analysts said equity inflows from some of these tax havens support the perception by Indian banks that business with India’s trading partners are not as lucrative as those in these tax-friendly states. Between 2000 and 2013, foreign direct investments from Mauritius and Singapore accounted for almost half of total investments into India.

In the current fiscal year, most FDI inflows have been from Mauritius, Singapore, the UK and the Netherlands.

Tax havens have become financial powerhouses because they do not have restrictions on repatriation of profits and offer a 10-year income tax holiday to foreign investors, among other reasons.