From a Miracle Boom to Niche Dependence: How the India DTAA shapes future Offshore Growth in Mauritius

Studies of Mauritius’ growth miracle have rarely acknowledged the pivotal role that the offshore sector has played in shaping the trajectory of the Mauritian political economy. Within the country, Mauritius’ offshore growth has provided a source of employment, massive amounts of foreign exchange and has redistributed wealth away from Euro-Mauritian control. However, Mauritius’ offshore sector (and as a result, the entire economy) faces two severe challenges: increased multi-lateral action against tax havens and the end of the Double Taxation Avoidance Agreement (DTAA) with India. These two challenges have already revealed the vulnerabilities of Mauritius’ niche specialisation in a low-end offshore financial activity: fund management. This paper builds on existing work to provide evidence of how Mauritius has lost influence within the Indian market and shows that recent developments highlight how specialisation in fund management may act as a curse for the sector. The chapter stresses the urgency of diversification within and outside the offshore sector but also stresses the domestic and international political challenges and competition that will need to be addressed.