India lowers dividend taxes for big French investors.

A three-decade-old tax treaty between France and India has been amended to lower dividend duties for major French investors while increasing Delhi’s authority to tax certain transactions.  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 declared during the visit that their relationship would be elevated to a “Special Global Strategic Partnership” and that they will strengthen their collaboration in areas including space technology and defense. 

On February 17, they praised the bilateral tax treaty amendment in a joint statement. 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.

For French investors who own less than 10% of an Indian company, the dividend tax would increase from 10% to 15%. The MFN clause was eliminated in accordance with an Indian Supreme Court ruling from 2023.

In this instance, the clause permitted nations that are members of the Organization for Economic Co-operation and Development (OECD) to get reduced tax rates in the event that India eventually gave another member of the international forum better conditions via a different treaty. India is an important partner of the OECD, even though France is a member.

The top court, however, decided that these benefits could not be applied automatically in such treaties and that a notification had to be sent out.

The revised treaty “realigns the bilateral trade framework with India’s current treaty policy” and international tax standards, global consultancy and financial services firm KPMG said in a statement.

“It also underscores India’s efforts to safeguard its tax base and promote a stable investment environment,” it added.