The Indo-Mauritius comprehensive economic cooperation and partnership agreement (CECPA) bilateral treaty covering investment and trade in goods and services has hit a hurdle with New Delhi demanding disclosure of cover-up companies hiding identities. Many unscrupulous politicians and bureaucrats who regularly siphon money out of the nation through kickbacks bring it back legally under the double taxation avoidance treaty (DTAA) and the new pact through front-end bogus companies.

Officials say that they do not want to scrap the new treaty but only to build in some safeguards on investment as it has with Singapore. In that format, only companies which have a track record of existence and investment history are allowed to take advantage of treaty provisions.

However, Mauritius seems reluctant to comply with this demand fearing that investment into the nation may be hit by such hurdles. It also claims that companies without concrete addresses are already disallowed by existing laws and says that additional changes are not necessary. India says that Mauritius is the preferred conduit by many unscrupulous Indians with 55% of foreign direct investment (FDI) from the island comes to India while only 15% goes to China, seen as a more alluring investment destination.