India and France have struck a deal to revise their 1992 treaty which will halve the tax on dividends paid by Indian units to French parents, potentially saving millions for companies with major operations in the South Asian nation, documents show.
Bollywood celebrity Alia Bhatt for L’Oreal, a company which could be affected by the new treaty – L’Oréal Paris
In return, India will get to widen its powers to tax share sales by French investors, and revoke the “most favoured nation” status of France that gave it certain tax advantages, according to confidential Indian government documents reviewed by Reuters.
Bilateral trade between India and France stood at $15 billion last year, and Indian Prime Minister Narendra Modi and French President Emmanuel Macron have been forging warmer ties. The two sides have been working to recast their tax treaty since 2024 to modernise it by adapting global standards on tax transparency.
“The proposed amending protocol will boost flow of investment, technology and personnel between India and France, and will provide tax certainty,” said one of the Indian government documents from August. The new treaty could have implications for large French portfolio investors as well as companies like Capgemini , Accor, Sanofi, Pernod Ricard, Danone, and L’Oreal– all of which have expanded their presence in India in recent years.
A key change is that French companies which hold a stake of more than 10% in any Indian entity will have to pay a 5% tax on the dividends they receive, instead of 10% earlier. For minority French shareholdings of under 10% in Indian companies, however, dividend tax will rise from 10% to 15%.
Many French firms’ Indian units like Capgemini Technology Services India, BNP Paribas Securities India and TotalEnergies Marketing India have declared dividends in the past, their Indian regulatory disclosures show. The Capgemini unit’s dividend stood at $500 million in 2023-24.
France’s tax office said it could not comment for this story given the negotiations are ongoing, while the finance ministry did not respond to Reuters’ queries. India’s foreign and finance ministries also did not respond. Capgemini and Danone declined to comment while the other French companies did not respond to Reuters’ queries.
Currently, India can impose taxes on any French entity’s share sale, but only when it holds more than 10% of an Indian company. The new proposed treaty will remove that threshold.
The new treaty “will provide for full source-based taxation rights in respect of capital gains on equity shares (in India),” said the Indian documents.
France-based foreign portfolio investors (FPIs) own $21 billion worth of shares in Indian companies as of November 2025, a third higher than levels in 2024, Indian share depository data shows. And more than 40 French companies hold stakes of under 10% in Indian entities, according to an analysis by Indian market intelligence platform Tracxn.
“This will impact French FPIs in India and also French companies holding minority interest in Indian companies. These investments were not subject to tax under the current treaty,” said Riaz Thingna, a partner at Grant Thornton Bharat LLP.
One official familiar with the deliberations told Reuters on condition of anonymity that Indian and French officials have agreed the terms of the new treaty, which will likely be signed in the coming weeks. In New Delhi, the deal is subject to final approval by Prime Minister Narendra Modi’s cabinet, according to the documents. Reuters is the first to report the planned changes to India-France treaty.
India has also agreed to France’s demand to limit tax on fees for technical services to cases where a French provider transfers technical know-how, removing most routine consultancy and support services from the scope of India’s tax. “This can help French companies that render services like design consultancy, cybersecurity and market research,” Thingna said.
Differences over how to interpret the so-called most-favoured nation, or MFN, clause were among the main reasons for the renegotiation, the official said. If a country has an MFN clause with India under a signed treaty, it typically starts claiming lower tax rates if New Delhi strikes more favourable tax terms later with another OECD nation. But a landmark Indian Supreme Court decision in late 2023 said countries can’t automatically start doing so, triggering concerns in France.
“This decision led to a sharp deterioration in the legal and economic security of French companies in India. The potential additional tax cost was estimated at 10 billion euros for existing contracts alone,” said the official.
India and France have reached a decision to delete the MFN clause from their treaty which had historically benefitted only France, according to Indian government documents. That was to put an end to disagreements related to its interpretation that have led to “tax uncertainty and protracted litigation,” said one document. Switzerland in January also suspended its application of the MFN clause in its India treaty citing the Supreme Court ruling.
There’s never a bad time to be the main choice as a fashion destination, but M&S has taken top-of-the-tree status this Christmas when it comes to AI gift inspiration. And in the Beauty category, Charlotte Tilbury has been mentioned more than any other cosmetics brand while Decathlon took top spot in the Sports category.
M&S
That’s all down to the ‘AI Christmas Nice List’ compiled by digital marketing and PR agency Tank, revealing which UK retailers AI favours for Christmas gifting by analysing hundreds of ChatGPT responses across 10 retail sectors, awarding a mention score based on how early products are recommended.
And of the top fashion searches, M&S achieved the highest mention score (21) in the category. And that was out of nearly 150 websites.
Following M&S, shoppers are more likely to see fashion picks from Next, Barbour and John Lewis, with mention scores of 20, 17 and 15, respectively.
Next, it has to be noted, also received three more total mentions than M&S, but “these were later in AI’s response and scored lower overall”, the report said.
High ratings for British heritage brand Barbour and John Lewis were helped by their annual Christmas ads bringing in press coverage and social media attention to drive holiday demand, with this year’s ad including Barbour’s retuned link-up with Shaun The Sheep.
Other big name fashion recommendations include Matalan at number five (14 mentions), followed by Sainsbury’s TU Clothing (11 mentions), Longchamp (10), accessories brand Fairfax & Favor and White Stuff (both 8 mentions).
John Lewis also showed up the most overall in ChatGPT, with 31 mentions across eight out of 10 sectors analysed including Home and Food & Drink categories.
Martin Harris, head of digital at Tank, commented on the research: “ChatGPT is used everyday for personal and commercial queries such as Christmas gift ideas, so if fashion brands aren’t appearing for the relevant results, they could be missing out on sales. AI search is important for retailers and while there is hesitancy around it, it is essential brands are discoverable where shoppers are searching for information.
“While some small retailers could struggle with being found in AI during peak seasons like Christmas, it presents an opportunity to improve visibility in their niche. Consumers can also use AI to find niche brands and products. That’s why it’s even more important retailers know what their customers want and have a strategy to appear in the relevant results.”
If you want to know how consumers are paying for their purchases, the BRC has just released its latest survey, saying that they swapped credit for debit cards and cash was used in just a fifth of transactions.
Barclays Payments
The BRC’s annual Payment Survey, based on data from last year, reveals a “significant decline” in the use of credit cards, from 14.2% of transactions to 12.6% as consumers turned to debit cards where usage increased from 62% to 64% of transactions.
However, despite their declining popularity, for larger transactions, consumers still preferred using credit cards overall, which offer additional protections for shoppers. Cards also beat cash, which accounted for just 19.2% of transactions.
“As the cost of living crisis eased, some customers returned to old habits. The weekly shop showed signs of a comeback with consumers making fewer but larger transactions”, the report highlighted, with the total number of transactions falling from 20.9 billion to 20.4 billion. Average transaction value rose across all payment types.
More shoppers have also been exploring less traditional payment methods than ever before, particularly for larger transactions. This included the use of gift vouchers, PayPal, and Buy Now Pay Later (BNPL), although no figures were given.
Chris Owen, Payments Policy Advisor at the British Retail Consortium said: “As interest rates peaked in 2024, the use of credit cards fell as customers switched to lower interest forms of payment. However, with cards still accounting for the vast majority of transactions and card fees now more than double the level they were six years ago, only a long-term cap on card fees would bring much needed relief to retailers.
He added: “Looking ahead, as the PSR transitions into the Financial Conduct Authority next year, it is vital that the FCA carries this work forward, delivering fairness and transparency in a market long hampered by competition issues and unjustified fee increases.”
The shares of Inditex, the largest listed company on the Spanish stock exchange, rose 1.85% on the morning of Friday, December 12, to €56.1 per share, surpassing the record high set a year ago, when they fell just short of €56.
Inditex headquarters – Inditex
According to market data compiled by Europa Press, the textile conglomerate is up more than 12% in 2025 and now has a market capitalisation of over €174 billion.
That said, Inditex’s share price had been anaemic- if not negative- over the course of the year, as from mid-March to early this month the stock traded below 2024 closing levels and touched an August low of €40.8.
The rally of the past two weeks- which has propelled the new highs- is attributable to the company’s latest quarterly results, which beat market expectations across the board.
Specifically, on December 3, the conglomerate reported a record third quarter (August to October), with profit up 9% to €1.831 billion and sales up 4.9% to €9.814 billion.
Thus, Inditex recorded net profit of €4.622 billion during the first nine months of its 2025–2026 financial year (between February 1 and October 31), an increase of 3.9% year on year.
Since the day before these latest results were announced, Inditex has gained 14% on the stock market.
Moreover, this particular milestone for Inditex has coincided with a broader one for the Spanish stock market, as its benchmark index, the Ibex 35, surpassed 17,000 points on Friday for the first time in its history.
Analysts’ assessment
“Clear path ahead,” Bank of America analysts concluded two weeks ago following Inditex’s results presentation, after a year of doubts about the outlook for the apparel sector.
“The acceleration of growth bodes well for the first half of 2027 […] and should pave the way for improvements in earnings per share,” they said. They therefore reiterated their buy recommendation while raising their price target from €54 to €60.
eToro market analyst Javier Molina noted that Inditex beat market expectations and is consolidating its transition towards a more premium positioning at a time when the consumer cycle is showing signs of moderating.
“The third quarter was particularly solid and clearly exceeded consensus forecasts,” he said, while, in his view, the shift to the luxury segment is reflected in investment in flagship stores, the renovation of strategic locations and projects such as the new Zara building in Arteixo, focused on product and technology.
The company, according to Molina, shows a “remarkable ability to adapt” to consumer preferences, consolidating collections with higher perceived value.
“But this progress comes at a demanding moment in the cycle, and the market will be watching whether the company is capable of maintaining the level it has set for itself,” he warned.
For his part, IG analyst Sergio Ávila argued that in the short term these figures support Inditex maintaining a premium to the sector, although he also warned that the bar for expectations is “very high.”
“If the company continues to defend margins and control inventories, I see a higher likelihood of consolidation at elevated levels than of a deep correction,” he said.
The most optimistic firm on the Galician group is Citi, which raised its price target from €54 to €63, while other firms such as Berenberg lifted theirs from €52 to €62 and Santander increased its from €55 to €58.40.
This article is an automatic translation. Click here to read the original article.
Politics8 years ago