Switzerland's Move To Cancel India's MFN Status: Will It Impact Nestle?

On December 11, 2024, Switzerland announced the suspension of the Most Favoured Nation (MFN) status granted to India under the Double Taxation Avoidance Agreement (DTAA). This decision followed an Indian Supreme Court ruling that MFN status cannot be enforced unless notified under Section 90 of the Income Tax Act.  

Nestlé’s Response to the Suspension  

Nestlé India clarified on December 19, 2024, that the suspension of the MFN clause will have no impact on its operations. The company emphasized that this is a policy matter between the governments of India and Switzerland and not specific to Nestlé.  

Supreme Court Ruling Explained  

The Supreme Court's decision overturned a 2021 Delhi High Court ruling that upheld the application of residual tax rates under the MFN clause in the DTAA. Nestlé India highlighted that it has consistently deducted a 10% withholding tax, aligning with the updated regulations, ensuring no effect on its business practices.  

Nestlé’s Long-standing Presence in India

Nestlé SA, the Swiss FMCG giant, considers India one of its top 10 global markets. The company has been operating in India for 112 years, underscoring its strong and enduring presence in the country.  
Despite the suspension of the MFN clause, Nestlé India reassures stakeholders that its operations remain unaffected, reiterating its compliance with Indian tax laws and commitment to its long-standing market.