Foreign portfolio investors (FPIs) in India have been scrambling to find safe tax havens ever since Mauritius lost its pole position after India's renegotiations around capital gains and may have finally zeroed in on six destinations where they can register their pooling vehicles.

FPIs are looking at France, Spain, and Denmark, and to some extent even Netherlands, where they can register their investment vehicles before they pump money in Indian equities. On the other hand Ireland and Luxembourg seem promising for locations from where debt investments can be made in India.

Top FPIs have roped in tax consultants in India to conduct a comparative analysis of these destinations. As of now France and Spain seem to be on top of the list for many, say people close to the development. It could take anywhere between 6 months to about a year for these FPIs to start investing from one of the new countries. "We are making at least one representation every day to FPIs or hedge fund managers about new countries that don't attract capital gains tax. Every destination has its own positives and negatives. A detailed research report has also been submitted to these investors," a partner with one of the big four firms told ET. These comparative analysis are a hush-hush business, say consultants ET spoke to. The fear among FPIs is that any limelight on these countries could mean government may commence renegotiations with these countries as well.

That said, none of the newer destinations would offer some of the benefits offered by Mauritius. It was especially lax on transparency and suspected round tripping of black money of Indian investors in domestic equity was the main trigger for the Indian government to put pressure on many countries to share data related to investors and final beneficiaries.

FPIs set eyes on France, Spain as new tax havens

"That happened with Netherlands, as soon as people started saying it aloud, it caught the government's eye. Not that FPIs want to exploit any loophole as they strictly follow regulations, but everyone is here to make money," said a consultant with a Mumbai based tax firm.

Also, the fear among many portfolio managers is what if other managers are able to earn better returns through these new routes, the consultant added.

Until now, many FPIs invested in India through Mauritius or Singapore taking advantage of double taxation avoidance agreement or tax treaty, thus avoiding any tax levy on short term investments. The government re-negotiated Mauritius tax treaty and from April 2017 FPIs will have to pay taxes in India on their short term capital gains. The Singapore treaty too is being renegotiated, and could face similar fate.

Many FPIs will continue with their current investments through Singapore and Mauritius but want to explore new investment vehicles for fresh investments, say industry trackers.

"The government has allowed a grandfathering clause in the Mauritius treaty, so old investments won't get taxed. Also Sebi regulations to shift current investment from one vehicle to another are too complicated, no one wants to fall into that," the tax consultant with one of the big fours said.

For most of the FPIs, changes in treaties is one of the major problems currently. ET had on Sept ember 7 written that FPIs are lobbying the government to resolve problems related to the India-Singapore tax treaty and general anti-avoidance rules (GAAR). Many experts say the government is aiming for a "level playing field" for all the FPIs and would go ahead and renegotiate all treaties. FPIs, however, hope that this would take time, as renegotiating treaties with all countries wouldn't be possible in next two to three years.