As global capital flows continue to recalibrate toward high-growth economies, India has emerged as a central pillar in international investment strategies. With sustained economic expansion, deepening capital markets, and progressive regulatory reforms, India presents a compelling opportunity for institutional and private investors alike. Yet, accessing this market efficiently and compliantly remains a key challenge for non-domestic investors. In this context, Cyprus has increasingly positioned itself as a strategic bridge between Europe and India, offering a robust regulatory framework and sophisticated structuring solutions.

The Evolving Nature of Cross-Border Investment

Cross-border investment today is no longer defined solely by capital allocation; it is shaped by regulatory alignment, transparency, and operational efficiency. Investors seeking exposure to emerging markets must navigate a complex landscape of foreign investment rules, tax considerations, and compliance obligations. India, despite its openness to foreign capital, maintains a detailed regulatory regime governing overseas participation in its financial markets. This has elevated the importance of regulated intermediaries and structured access routes.

European Union jurisdictions, particularly those with mature fund management ecosystems, play a critical role in bridging this gap. Cyprus, as an EU member state, combines regulatory credibility with flexibility, making it an increasingly attractive hub for international fund managers targeting India.

Cyprus as a Financial Jurisdiction

Cyprus has developed into a respected financial centre with a well-established alternative investment fund management (AIFM) framework aligned with EU directives. On 5 July 2013, Cyprus transposed the Alternative Investment Fund Managers Directive (AIFMD 2011/61/EU) into national law through Law 56(I)/2013, establishing a comprehensive legal framework for AIFM authorisation, capital requirements, operating conditions, and marketing(1). Its regulatory environment supports a wide range of investment vehicles, including alternative investment funds with segregated compartments, special purpose vehicles, and tailored multi-asset strategies. These structures allow investors to achieve precise exposure while maintaining transparency, governance, and regulatory oversight.

Beyond its regulatory infrastructure, Cyprus benefits from longstanding economic and diplomatic ties with India, reinforced by bilateral agreements and a growing emphasis on cross-border cooperation. This combination positions Cyprus not merely as a domicile of convenience, but as a strategic jurisdiction for structuring and managing India-focused investment strategies.

Regulated Access to India's Capital Markets

A critical element in accessing India's public markets is the Foreign Portfolio Investor (FPI) framework, governed by the Securities and Exchange Board of India (SEBI) through the SEBI (Foreign Portfolio Investors) Regulations, 2019 (2). Among the various FPI classifications, Category I status represents the highest level of regulatory recognition, reserved for appropriately regulated and institutionally robust entities such as sovereign wealth funds, pension funds, and regulated investment managers from FATF-compliant jurisdictions. This classification enables more efficient market participation, streamlined operational processes, and enhanced credibility with Indian regulators and counterparties.

For investors, accessing India through a regulated European AIFM that holds FPI Category I registration offers several advantages. These include simplified onboarding, reduced administrative friction, adherence to international compliance standards, and consistent reporting. Importantly, such structures allow investors to focus on portfolio construction and strategic allocation rather than regulatory complexity.

The Importance of Efficient Structuring

Efficient structuring is fundamental to successful cross-border investment. In the context of India, structuring determines not only compliance, but also flexibility, scalability, and risk management. Well-designed investment platforms allow for diversification across asset classes, sectors, and instruments, while ensuring alignment with investor mandates and regulatory requirements.

Through Cyprus regulated AIFM platforms, European investors can gain exposure to Indian equities, debt instruments, and other market-linked opportunities within a controlled and transparent framework help in regulated Depositaries. These platforms support active portfolio management and facilitate capital deployment in response to evolving market conditions, without compromising governance standards.

Reinventing the Investment Bridge

The concept of Cyprus as a bridge between Europe and India reflects a broader shift in how global investment is approached. Rather than viewing jurisdictions in isolation, investors increasingly seek integrated solutions that combine regulatory strength, market access, and local expertise. Cyprus offers this integration, serving as a conduit through which European capital can engage with India's growth story in a structured and compliant manner.

The bilateral framework supporting this relationship was strengthened on 18 November 2016, when Cyprus and India signed a revised Double Taxation Avoidance Agreement (DTAA), replacing the previous treaty established in 1994 (3).The revised agreement, aligned with the OECD Model Convention, provides for source-based taxation of capital gains on share sales, with grandfathering provisions for investments made prior to 1 April 2017. Between April 2000 and September 2015, Cyprus invested a cumulative $8.328 billion in India, making it the eighth-largest foreign direct investor (4).

This approach benefits Indian markets by attracting long-term, professionally managed capital that adheres to international best practices. In turn, it supports market depth, stability, and continued development—objectives shared by regulators and market participants alike.

Looking Ahead

As India's role in the global economy continues to expand, demand for reliable and efficient access routes will grow. Jurisdictions that can offer regulatory clarity, structural flexibility, and strong institutional frameworks will be central to this evolution. Cyprus, with its EU-aligned regulatory environment, corporate tax rate of 15% from 1st January 2026, and extensive double taxation treaty network covering over 60 countries (5), is well positioned to meet this demand.

Reinventing cross-border investment is not about creating complexity, but about reducing friction through intelligent structuring and regulatory alignment. By serving as a strategic bridge between Europe and India, Cyprus contributes meaningfully to the next phase of global capital allocation—one defined by transparency, efficiency, and long-term value creation.

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References

1 Cyprus Investment Funds Association (CIFA). "Alternative Investment Funds." https://www.cifacyprus.org/en/aifs

2 Securities and Exchange Board of India. "SEBI (Foreign Portfolio Investors) Regulations, 2019" and "Operational Guidelines for Foreign Portfolio Investors." https://www.sebi.gov.in

3 Dixcart Group. "Cyprus as a Gateway for Indian Cross Border Transactions." https://www.dixcart.com/cyprus-as-a-gateway-for-indian-cross-border-transactions/

4 Cyprus–India bilateral relations data. Ministry of External Affairs, Government of India; Wikipedia. https://en.wikipedia.org/wiki/Cyprus–India_relations

5 Tax.com.cy. "Double Taxation Treaties: Cyprus Guide to Treaty Countries." https://tax.com.cy/guides/countries-with-double-taxation-treaties-comprehensive-cyprus-guide/