What every foreign investor in India should know
Published in Fortune India | April 2025
Avnish Arora, Executive Director, Direct Tax, said that foreign investment in India has steadily increased over the past decades, driven by the country’s strong economic growth, large consumer base, and reform-oriented government policies. "However, despite the opportunities, foreign investors often face significant taxation and regulatory challenges that can impact returns," he said.
Understanding India’s complex tax framework is crucial for structuring investments efficiently and ensuring compliance.
He further added, "India’s General Anti-Avoidance Rules (GAAR) and Place of Effective Management (PoEM) guidelines can further complicate tax planning by targeting arrangements lacking commercial substance or driven primarily by tax avoidance. This has led to greater scrutiny of foreign investment structures, especially those routed through jurisdictions such as Mauritius and Singapore".