Role of Tax Structure and Tax Treaties in Foreign Direct Investment Inflows in India

The emerging globalization has significantly boosted India’s economic growth, reshaping its fiscal policies and investment landscape. This study examines the impact of India’s tax structure and comprehensive tax treaties on foreign direct investment (FDI) inflows and tax revenue. By analyzing the upward trend of FDI equity inflows and total tax collections, this paper highlights the effects of key policy reforms, particularly the implementation of the Goods and Services Tax (GST) in 2017 and amendments to tax treaties with both tax haven and non-tax haven countries. The findings of the study suggest that these reforms have fostered a more investor-friendly economic environment, leading to increased FDI and enhanced tax revenue. The study underscores the importance of a structured and transparent tax system in driving economic stability, attracting foreign investment, and reinforcing India’s position in global trade. A well-balanced tax framework and effective tax treaties are crucial for ensuring sustained economic growth and competitiveness.