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 :

Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(A) is false, but (R) is true
Both (A) and (R) are true and (R) is the correct explanation of (A)
(A) is true, but (R) is false

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Answer:

Option C: Both (A) and (R) are true and (R) is the correct explanation of (A)

Detailed Solution:

The correct answer is “Both (A) and (R) are true and (R) is the correct explanation of (A)”.

During 2023-24, Singapore indeed emerged as the largest source of Foreign Direct Investment (FDI) to India.

The amendment to the India-Mauritius Tax Treaty did indeed bring a shift in the pattern of FDI flows to India. Prior to the amendment, Mauritius was a major source of FDI into India due to favorable tax treatment, but after the treaty was amended in 2016, the flow of FDI through Mauritius has declined. As a result, countries like Singapore have risen in prominence as major sources of FDI to India.