Q. Given below are two statements, one is labelled as Assertion (A) and the other as Reason (R).
Assertion (A): During 2023–24, Singapore emerged as the largest source of FDI to India.
Reason (R): The India–Mauritius Tax Treaty amendment has brought a major shift in countries as major sources of FDI to India.
Select the correct answer from the codes given below.
a) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
b) (A) is false, but (R) is true.
c) Both (A) and (R) are true and (R) is the correct explanation of (A).
d) (A) is true, but (R) is false.
Question from UPPSC Prelims 2024
Correct Answer: c) Both (A) and (R) are true and (R) is the correct explanation of (A).
Explanation:
Assertion (A): During 2023–24, Singapore emerged as the largest source of FDI to India.
This statement is accurate. In the fiscal year 2023–24, India received the highest foreign direct investment (FDI) from Singapore, amounting to $11.77 billion, despite a 31.55% decline from the previous year.
Reason (R): The India–Mauritius Tax Treaty amendment has brought a major shift in countries as major sources of FDI to India.
This statement is also accurate. The amendment to the India–Mauritius tax treaty, which introduced source-based taxation for capital gains, reduced the tax advantages previously enjoyed by investors routing investments through Mauritius. Consequently, investors began favoring other jurisdictions, notably Singapore, leading to a shift in the primary sources of FDI to India.
Therefore, the correct answer is: Both (A) and (R) are true and (R) is the correct explanation of (A).
