New Delhi, Aug. 3 -- For decades, the story of foreign capital entering India had a familiar opening line: it began somewhere else-usually in Mauritius. Between 2000 and 2024, Mauritius accounted for nearly one-fourth of India's foreign direct investment-about $179 billion. It was India's largest single-country source.

The island nation was a legal address through which global capital reached India. An entire ecosystem grew around one idea: the right tax treaty could transform the returns on investing in India.

That idea is fading. As treaties narrowed and scrutiny intensified, Mauritius lost its shine. Another island nation, Singapore, has overtaken it in recent quarters. But the more interesting development is that smart capital is no...