A three-decade-old tax pact between France and India has been updated, increasing Delhi’s authority to tax certain transactions but decreasing dividend levies for major French investors. Major corporations like Sanofi, Renault, and L’Oreal, who have increased their investments in India in recent years, may profit from the reforms. Additionally, the agreement grants Delhi the authority to tax capital gains from share sales, including those in which a French company controls less than 10% of an Indian business.
A most-favoured-nation (MFN) clause that had permitted French firms to claim a reduced tax rate in India is also eliminated in the amended treaty. Once all procedures and legal clearances have been completed in both nations, it will take effect. Days after French President Emmanuel Macron’s visit to India, India’s finance ministry on Monday unveiled the specifics of the revised pact.
The nations stated during the visit that they had elevated their relationship to a “Special Global Strategic Partnership” and strengthened their collaboration in sectors including space technology and defense. On February 17, they praised the bilateral tax treaty amendment in a joint statement. They said that it would “secure economic activity for French and Indian businesses and pave the way for greater investments and collaborations between the two countries” .
According to data reported by the Reuters news agency, foreign portfolio investors headquartered in France had shares in Indian companies valued at $21 billion (£15.6 billion) as of January 2026. Last year, India and France’s bilateral commerce was $15 billion. The new regulations will reduce the dividend tax rate from 10% to 5% for French firms that possess at least 10% of an Indian company. For French investors who own less than 10% of an Indian company, the dividend tax would increase from 10% to 15%.
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