Finance Companies Cannot Be Set Up With FDI From Mauritius: RBI

The Reserve Bank of India recently said that companies cannot set up Foreign Direct Investment from Mauritius.
The apex bank has also banned FDI from jurisdictions similar to Mauritius as they do not comply with the norms set by Financial Action Task Force (FATF).
Mauritius was recently listed in grey list of the FATF.
RBI banned the FDI from Mauritius to prevent round tripping.
Round tripping is common in countries that enjoys tax havens (such as Mauritius). Here, the companies from home country take the route of foreign investment to enjoy tax havens. In other words, shell companies are created in foreign lands.