NEW DELHI — India and France have finalized revisions to their 1992 double taxation avoidance treaty, slashing dividend taxes for major French investors while expanding India’s taxing rights on share sales, according to confidential government documents reviewed exclusively by the World Cultural Heritage Council News Service. The deal halves the withholding tax on dividends from 10% to 5% for French companies holding more than 10% stakes in Indian units, potentially saving millions for giants like Capgemini, Sanofi, Pernod Ricard, and L’Oreal.
These firms have ramped up operations in India, with Capgemini’s Indian arm alone declaring $500 million in dividends for 2023-24.In exchange, India gains broader authority to tax capital gains on equity shares sold by French entities, eliminating the previous 10% ownership threshold. This targets France’s $21 billion in portfolio investments in Indian markets as of November 2025, up a third from 2024 and minority stakes held by over 40 French companies.
The protocol also scraps France’s “most favoured nation” (MFN) clause, ending disputes fueled by a 2023 Indian Supreme Court ruling that blocked automatic tax rate reductions. French officials had warned of €10 billion in potential extra costs; deleting the clause restores “tax certainty,” per Indian documents. Bilateral trade hit $15 billion last year, bolstered by ties between Prime Minister Narendra Modi and President Emmanuel Macron. Negotiations since 2024 align the treaty with global tax transparency standards, easing flows of investment, technology, and personnel.
India further conceded on technical service fees, limiting taxes to cases involving know-how transfers, sparing routine consultancy in areas like cybersecurity and market research. An official close to talks said terms are agreed, awaiting Modi’s cabinet nod for signing soon.”This will impact French FPIs and minority investors previously untaxed on gains,” noted Riaz Thingna, partner at Grant Thornton Bharat LLP. France’s tax office and India’s ministries declined comment amid ongoing finalization.