India, France Amend Long-Standing Tax Treaty to Benefit Investors

(MENAFN) India and France have updated a decades-old tax agreement, reducing dividend taxes for large French investors while giving India expanded authority to tax certain transactions.

The changes could benefit major companies such as Sanofi, Renault, and L'Oreal, which have increased their investments in India in recent years.

The revised treaty also allows India to tax capital gains from the sale of shares, including transactions in which a French entity owns less than 10% of an Indian company.

Additionally, the amendment removes a most-favoured-nation (MFN) clause that previously allowed French entities to claim lower tax rates in India. The treaty will take effect once both countries complete the required legal formalities.

The finance ministry of India released the details on Monday, shortly after French President Emmanuel Macron visited India. During the visit, the countries announced the elevation of their relationship to a "Special Global Strategic Partnership" and expanded cooperation in areas such as defence and space technology.

In a joint statement on February 17, the two nations welcomed the amendment, saying it would "secure economic activity for French and Indian businesses and pave the way for greater investments and collaborations between the two countries."

As of January 2026, France-based foreign portfolio investors held $21 billion (£15.6 billion) in Indian company shares, according to reports. Bilateral trade between the countries reached $15 billion last year.

Under the new rules, French companies with at least a 10% stake in an Indian company will pay 5% tax on dividends, down from 10% previously.

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