Bermuda yesterday signed a tax information exchange agreement (TIEA) with India at a ceremony in New Delhi.

Premier Ewart Brown, who is in the Indian capital to attend the ongoing Commonwealth Games, signed the document, along with India's Minister of State for Finance, SS Palanimanickam.

The TIEA was Bermuda's 23rd agreement and India's first.

Yesterday Finance Minister Paula Cox, who remained on the Island as Acting Premier, revealed that the Island is one of India's leading sources of foreign investment — a position it now hopes to build on.

"Presently, Bermuda ranks as one of the highest providers in the world of foreign direct inflows (FDI) to India," said Ms Cox. "In fact, Bermuda is 15th on the list of Foreign Direct Investments into India and with the TIEA, it could very well get into the top 10 in future.

"Currently, there are 120 entities in Bermuda with Indian interests. This agreement will further enhance investment opportunities between our two countries and open new avenues for funds domiciled in Bermuda to directly invest in India.

"Moreover, with the increasing liberalisation of the Indian insurance sector, and the recently passed civil nuclear liability bill passed by the Parliament of India, further opportunities will be available for insurers and reinsurers in Bermuda."

Both Bermuda and India last week successfully completed the first phase of a peer review process conducted by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes and attained the status of "all elements met" for their regulatory and legal frameworks.

Bermuda and India were the only two of the first eight to be reviewed to have met all the criteria identified by the peer review methodology.

Mr. Palanimanickam said: "It is a great occasion for India to be signing its first TIEA with Bermuda. The agreement is important in the perspective of efforts made by Global Forum to build an effective system for exchange of information around the world.

"India being the vice-chair of Peer Review and Bermuda being the vice-chair of Global Forum are playing important roles in this work. We are confident that the relationship between the two countries would be strengthened with this agreement."

In a statement released yesterday, the Finance Ministry added that Bermuda and India are presently concluding negotiation of a Memorandum of Understanding on Economic Trade and Technical Cooperation which provides a framework for deepening economic and commercial relations between the two jurisdictions.

As well as providing for a full exchange of information on criminal and civil tax matters between the two countries, the TIEA exempts Bermuda from punitive measures that apply to India's listed countries, such as the application of CFC rules, expense deduction rules, special tax rules, and capital gains realised by non-resident entities.

The agreement was negotiated in New Delhi in February. Bermuda's negotiation team included Assistant Financial Secretary Wayne Brown, treaty adviser Laura Hershey and Crown counsel Huw Shepheard.

Present with the signatories at yesterday's ceremony were Environment, Youth and Sport Minister Glenn Blakeney and the Premier's executive aide Dale Jackson, along with several officials from India's Finance Ministry.