The Tiger Global ruling may dent investor confidence

The Supreme Court’s ruling in the Tiger Global-Flipkart stake sale case has been framed as a blow against tax-treaty abuse.

- AMIT BAID

In reality, it doessomething far more consequential: it rewrites the operating assumptions underwhich foreign capital has been invested in India for decades. While the judgements fact-specific, its reasoning dismantles the comfort investors drew from treaty residency, grandfathering assurances and carefully structured exits. It resets India’s investment jurisprudence, with ramifications for private equity (PE), venture capital (VO), foreign portfolio investors (FPIs) and long-term strategic capital.

The most immediate consequence of the rulingis for pre-2017-18 PE, VC and foreign direct investments, particularly those routed through Mauritius. For years, such structures relied on tax residency certificates, board resolutions and governance frameworks to demonstrate control outside India. The Supreme Court has madeit clear that paper compliance isno longer enough.

Most Mauritius special purpose vehicles (SPVs) were postbox entities by design, with structures ‘expert-engincered’ to satisf India’s tax treaty with Mauritius in form—periodic board meetings, internal approvals and decision-making records—without much real operational or commercial substance. This model may now fail, unless investors can demonstrate genuine eco-nomicsubstance and decision-making at the treaty jurisdiction level.