Under the Indo-Mauritian Bilateral Investment Promotion and Protection Agreement signed by officials of the two countries, the two countries will strive to create conditions for the greater flow of investments in either country. A protocol on cooperation in the field of meteorology was also signed.

Thanks to favourable tax treatment in Mauritius, the latter is already India's second largest foreign investor after the US with total investment approvals exceeding $4.3 billion. Apart from foreign companies, a number of Indian companies have also found Mauritius an ideal tax haven for thepromotion of special purpose vehicles, mutual funds and holding companies. Mauritius is ahead of countries like the UK, Japan and Germany in terms of foreign investments in India.

However, recent years have seen a steady increase in Indian direct investment in Mauritius in view of the potential for exports. Mauritius provides a strategic route to three major markets of the world: the European Union and the South and East African markets. Mauritius can thus provide a base for exports, especially through the Freeport.

Trade relations have, therefore, been growing with the establishment of joint ventures between Indian and Mauritian firms.

Mauritius is a major importer of Indian goods with the trade balance being heavily tilted in favour of India. In calendar 1997, Indian exports totalled US $226 million as against imports by India of only $7 million. Indian exports have been growing at the rate of 25 per cent to 30 per cent a year over the last three years, and Indian firms have a 9.91 per cent share oftotal Mauritian imports, after France and South Africa.

Among the major Indian companies that have offices in Mauritius are public sector organisations like LIC, New India Insurance, Telecommunications Consultants (India) Ltd, and private sector companies like Essar Textiles, Arvind Overseas Mills, Larsen & Toubro and Ashok Leyland.