Authors:
India’s Advance Pricing Agreement (APA) programme has evolved as a cornerstone of the country’s transfer pricing regime. With the latest report in the year 2024-25, the CBDT completes a decade of reporting on the APA program. APA applications filed and agreements signed have steadily increased, with FY 2024–25 marking the highest number of concluded APAs (174). This magnanimous growth reflects an increasing trust that multinational enterprises (MNEs) place in the Indian tax administration’s ability to promote certainty and reduce litigation.
An analysis of trends from the past decade of APA reporting reveals:
- Bilateral APAs account for approximately 30% of overall filings1
- Bilateral APAs account for approximately 25% of APAs signed2
- Over 55% of concluded Unilateral APAs take over 3 years to conclude; almost 20% take over five years.
- Over 75% of Bilateral APAs concluded take over 3 years to conclude; over 40% take over five years.
- Over 60% of bilateral APAs conclude using the TNMM as the most appropriate method.
- Interestingly, the sixth or “Other Method” is being increasingly used to close bilateral APAs, and accounts for the second most frequently used method (over 15% of total concluded bilateral APAs), over the past decade. Acceptability by treaty partners of the “Other Method”, which is a construct of Indian legislation, seems intriguing. Both the OECD and the UN Transfer Pricing Guidelines do not recognise an explicit “Other Method”3.
- It appears that the trend of APA closures is driven by simplicity. Complex transactions such as intangibles or transactions using Profit Split or even the CUP Method are few.
The programme has played a critical role in reducing the burden on India’s tax tribunals and judiciary. Ite has helped resolve transfer pricing disputes across 4,400 assessment years some of which may led to disputes. The rollback provisions (applying APA terms to prior years), which allow for (retrospective) certainty, have been particularly effective in clearing legacy disputes and fostering a cooperative compliance environment.
The geographical distribution of Associated Enterprises (AEs) involved in APAs highlights India’s deepening economic ties with key global markets. The United States, United Kingdom, Singapore, Germany, and Japan consistently appear as top jurisdictions. This pattern also aligns with India’s broader trade and investment relationships, suggesting that the APA programme is not only a tax certainty tool but also a vital facilitator of confidence to foster foreign investment .
Industry-wise, the dominance of the IT and IT-enabled services sector in APA signings is a testament to India’s leadership in outsourcing. However, the increasing participation of sectors such as pharmaceuticals, automotive, engineering services, and financial services indicates a broadening base of APA applicants. This diversification is a positive sign for the Indian economy, suggesting that more industries are engaging in cross-border transactions and seeking proactive tax certainty.
The trend toward bilateral APAs (BAPAs) is another important feature. These agreements, which involve both India and a treaty partner jurisdiction, provide certainty in both countries and help eliminate double taxation. The rise in BAPA filings and closures in recent years reflects improved international cooperation and Indian tax administration’s growing credibility in global forums.
In summary, the APA data from FY 2015–16 to FY 2024–25 symbolises a shift towards transparent, predictable, and cooperative tax environment in India. It reflects the government’s commitment to address ease of doing business and its ability to adapt to the complexities of global commerce. The programme’s success signals to investors that India is a jurisdiction where tax certainty can be achieved through dialogue and mutual understanding
India’s APA Landscape: Sectoral and Industry Trends – an AI driven analysis 4:
1. Distribution of agreements – Economic Activity wise
| Sector / Economic Activity | 2016–17 | 2017–18 | 2018–19 | 2019–20, 2020–21 and 2021–22 | 2022–23 | 2023–24 | 2024-25 |
| Services | 107 | 41 | 25 | 98 | 69 | 76 | 112 |
| Manufacturing | 34 | 5 | 6 | 3 | – | 2 | 2 |
| Trading | 6 | 11 | 6 | 5 | – | 3 | 10 |
| Manufacturing & Trading | – | 4 | 14 | 15 | 4 | 9 | 10 |
| Manufacturing, Trading & Services | – | – | – | 8 | 9 | 18 | 22 |
| Manufacturing & Services | – | 4 | 1 | 9 | – | 7 | |
| Service & Trading | – | 2 | 0 | 14 | 6 | 10 | 3 |
The sectoral distribution of APAs in India from 2016–17 to 2024–25 reflects interesting patterns. The data shows that the services sector has consistently led APA signings, underscoring India’s growing dominance in IT and IT-enabled services. This dominance is not surprising given the volume of cross-border service transactions and the need for predictable tax outcomes in a sector that operates on recurring nature of intercompany transactions, coupled with the intense scrutiny margins of service-providers attract from tax auditors.
The manufacturing sector showed strong participation in the early years but has gradually declined. This trend may be attributed to the relatively straight nature of manufacturing transactions, which are often benchmarked using standard methods and may not require certainty that APAs provide. However, the emergence of hybrid categories such as manufacturing and trading, and manufacturing, trading and services, indicates that businesses with complex operational footprints are increasingly looking for APAs. Such combinations reflect integrated supply chains and multifunctional business models, which are more susceptible to transfer pricing disputes. The rise in these hybrid agreements suggests that the APA programme is evolving to accommodate the realities of modern commerce, where companies rarely operate in silos.
Trading entities have maintained a modest but steady presence in APA signings. Their participation has increased in recent years, possibly due to the growth of e-commerce and global distribution networks. The inclusion of service and trading combinations further supports this, as companies blend logistics with support functions like marketing and customer service. Such blended models often face challenges in delineating value creation across jurisdictions, making APAs a valuable tool for managing tax risk.
The fluctuation in APA closures across sectors also reflects broader economic and regulatory developments. For instance, the dip in service sector agreements, in the years following 2016–17, may be linked to the initial backlog of applications being cleared, while India’s resurgence in later years aligns with increased digitalisation and global outsourcing post-pandemic. Similarly, the rise in hybrid agreements coincides with India’s push for manufacturing under initiatives like “Make in India,” which encouraged companies to expand their local operations, with tax incentives and engage in complex cross-border transactions.
Overall, the sectoral trends in APA closures reveal a matured programme that is responsive to the needs of diverse industries. A consistent engagement from service providers, the growing interest from hybrid business models, and the steady participation from trading entities point to a tax environment that values certainty, cooperation, and adaptability. As India continues to integrate into global value chains, the APA programme will play a crucial role in supporting compliant and competitive cross-border operations.
2. Comparative Industry-wide Distribution of BAPA Agreements (FY 2016–17 to 2024–25)
| Industry | 2016–17 | 2019–2020;2020-21 and 2021-22 | 2022–23 | 2023–24 | 2024–25 |
| Information Technology / ITES | – | 21 | 14 | 22 | 39 |
| Services | – | 5 | 10 | 13 | 11 |
| Pharmaceuticals / Chemicals | – | 2 | 3 | 2 | 2 |
| Automotive | 2 | 1 | 1 | 2 | 4 |
| Telecommunication | 4 | – | – | – | 1 |
| General Trading | 5 | – | – | – | – |
| Electronics | – | – | 3 | – | – |
| Real Estate | – | – | 1 | – | 1 |
| Cement | – | 3 | – | – | – |
| Biotechnology | – | 1 | – | – | – |
| Consumer Goods | – | – | – | – | 3 |
| Iron and steel | – | – | – | – | 3 |
| Financial Services | 0 | 0 | 0 | 0 | 2 |
| Music and Audio Equipment | 0 | 0 | 0 | 0 | 1 |
The comparative industry-wide distribution of BAPAs from FY 2016–17 to FY 2024–25 reflects a clear evolution in industries engaging with the programme. Initially, participation was limited and concentrated in a few sectors, but over time, the programme has expanded to accommodate a broader range of industries, indicating its relevance and adaptability.
The most prominent trend is the dominance of the Information Technology and IT-enabled services sector. This sector has consistently led BAPA signings in recent years, which aligns with India’s global position in software development, business process outsourcing, and digital services. The services sector, while consistently present, has shown moderate growth. This includes consulting, financial advisory, and support services, which involve significant intercompany dealings. Their steady participation suggests that businesses with intangible value creation and shared service models are increasingly seeking bilateral certainty to avoid double taxation. Pharmaceuticals and chemicals have maintained a t consistent presence. This industry often involve complex licensing arrangements, R&D cost sharing, and royalty payments, which are prone to transfer pricing disputes. The use of BAPAs reflects an effort to resolve issues proactively, as India continues to grow as a hub for pharmaceutical manufacturing and innovation. Automotive companies have shown intermittent engagement, with a slight increase in recent years. This may be due to the global nature of automotive supply chains and the need to align pricing policies across jurisdictions. The presence of BAPAs in auto sector suggests that manufacturers are seeking to mitigate risks associated with component pricing, contract manufacturing, and distribution margins.
Other sectors such as telecommunications, , electronics, and real estate have had limited participation. Their sporadic presence may indicate either a lower volume of cross-border transactions or reliance on other resolution mechanisms. However, the emergence of industries like consumer goods, iron and steel, and financial services in BAPA closures point to a diversification of the APA applicant base. These sectors are increasingly globalised and face complex pricing challenges, making BAPAs a valuable tool for managing tax exposure. The data also reflects the tax administration’s growing capacity to handle diverse and complex cases. The expansion of BAPA coverage across industries demonstrates the programme’s maturity and its alignment with
international best practices. According to the OECD’s Mutual Agreement Procedure statistics, India has significantly improved its resolution timelines and engagement with treaty partners, which has likely contributed to the rise in BAPA signings.
Growth, Shifts, and Strategic Impact
India’s APA programme has undergone a remarkable transformation over the past decade. From its early years of cautious adoption to its current role as a strategic compliance tool, the programme has expanded in scope, volume, and complexity. The data from FY 2015–16 to FY 2024–25 reveals a consistent upward trajectory in applications filed, and agreements signed, underscoring the growing demand for certainty among multinational enterprises.
1. Application Trends
Between FY 2015–16 and FY 2024–25, a total of 1,515 APA applications were filed, comprising 1,004 Unilateral APAs (UAPAs) and 511 Bilateral APAs (BAPAs). The number of BAPA applications has steadily increased, rising from 24 in FY 2015–16 to 90 in FY 2024–25. This shift reflects a growing preference for bilateral certainty, especially among companies with significant cross-border operations. The surge in total applications—from 137 in FY 2015–16 to 215 in FY 2024–25—demonstrates the programme’s expanding relevance across industries.
| Financial Year | UAPA Applications | BAPA Applications | Total Applications |
| 2015–16 | 113 | 24 | 137 |
| 2016–17 | 80 | 25 | 105 |
| 2017–18 | 121 | 52 | 173 |
| 2018–19 | 124 | 47 | 171 |
| 2019–20 | 76 | 50 | 126 |
| 2020–21 | 100 | 33 | 133 |
| 2021–22 | 39 | 35 | 74 |
| 2022–23 | 116 | 77 | 193 |
| 2023–24 | 110 | 78 | 188 |
| 2024–25 | 125 | 90 | 215 |
| Total | 1004 | 511 | 1515 |
2. Agreement Execution
The volume of APAs signed has shown a consistent upward trend since FY 2021–22. The volume of APAs signed has steadily increased since FY 2021–22, with each year from FY 2020–21 onward setting a new benchmark. In the current year, the programme reached its highest level of activity to date, recording the largest number of both unilateral and bilateral agreements. Notably, the signing of over 150 APAs marked a significant milestone in the programme’s expansion. This growth reflects improved administrative capacity and stronger engagement with treaty partners.
| Financial Year | UAPAs Signed | BAPAs Signed | Total Agreements |
|---|---|---|---|
| 2015–16 | 53 | 2 | 55 |
| 2016–17 | 80 | 8 | 88 |
| 2017–18 | 58 | 9 | 67 |
| 2018–19 | 41 | 11 | 52 |
| 2019–20 | 50 | 7 | 57 |
| 2020–21 | 18 | 13 | 31 |
| 2021–22 | 49 | 13 | 62 |
| 2022–23 | 63 | 32 | 95 |
| 2023–24 | 86 | 39 | 125 |
| 2024–25 | 109 | 65 | 174 |
| Total | 615 | 200 | 815 |
3. Years of Tax Certainty
The APA programme has delivered certainty across 4,400.5 assessment years, including 934.5 rollback years. Rollback provisions have played a critical role in resolving legacy disputes and enhancing the programme’s appeal. FY 2024–25 alone contributed 970.5 covered years, indicating the programme’s growing impact.
| Category | APA Years | Rollback Years | Total Years |
| Agreements till FY 2023–24 | 2626 | 804 | 3430 |
| Agreements in FY 2024–25 | 840 | 130.5 | 970.5 |
| Cumulative till FY 2024–25 | 3466 | 934.5 | 4400.5 |
India’s APA programme has matured into a robust mechanism for managing transfer pricing risks. The steady rise in applications and agreements, the expansion of bilateral coverage, and the significant number of covered years all point to a programme that is both responsive and strategic. As global operations become more complex, the APA framework will continue to play a vital role in fostering tax certainty and reducing disputes.
Conclusion
An analysis of ten years of India’s APA reports reflects a steady evolution from a nascent compliance tool to a mature and globally recognised dispute resolution mechanism which has been widely appreciated. The programme has delivered significant benefits to taxpayers, particularly those with complex or recurring cross-border transactions, by offering multi-year certainty and reducing exposure to double taxation. While alternative mechanisms such as Mutual Agreement Procedure (MAP) and domestic litigation remain available, the structured and forward-looking nature of APAs makes them a preferred choice for many multinational enterprises.
An increasing number of BAPAs signings with jurisdictions such as the United States, United Kingdom, and Japan is closely linked to India’s proactive engagement in treaty-based dispute resolution mechanisms. India’s participation in the OECD’s FTA MAP Forum and its consistent reporting of MAP statistics reflect a commitment to transparency and international cooperation. In calendar year 2024 alone, India resolved 131 MAP cases against 96 new invocations, reducing its closing inventory to 386 cases. The steady decline in MAP pendency, driven by enhanced communication with treaty partners and maturing diplomatic relationships, has created a conducive environment for bilateral certainty. The APA programme thus complements India’s MAP efforts, reinforcing its position as a reliable and responsive jurisdiction for cross-border tax dispute resolution.
India’s APA and competent authorities have demonstrated a practical and business-aligned approach in negotiations, and the programme’s expansion to cover profit attribution to permanent establishments marks a proactive step in addressing long-standing controversies. Measures such as virtual site visits, digital agreement execution, and streamlined bilateral engagement underscore the administration’s commitment to improving efficiency and accessibility. As the programme continues to grow in scope and sophistication, it remains a cornerstone of India’s international tax framework and a strategic option for taxpayers seeking certainty, transparency, and cooperative resolution.
1 India has received a total of 2062 APA applications, of which 1,445 (70%) are unilateral.
2 India has signed a total of 815 APAs since inception, of which 75% are unilateral – one Multilateral APA to date, 199 Bilateral APAs, and 615 Unilateral APAs.
3 Para 2.9 of the 2017 OECD Guidelines states “Moreover, MNE groups retain the freedom to apply methods not described in these Guidelines (hereafter “other methods”) to establish prices provided those prices satisfy the arm’s length principle in accordance with these Guidelines. Such other methods should however not be used in substitution for OECD-recognised methods where the latter are more appropriate to the facts and circumstances of the case. In cases where other methods are used, their selection should be supported by an explanation of why OECD-recognised methods were regarded as less appropriate or nonworkable in the circumstances of the case and of the reason why the selected other method was regarded as providing a better solution. “
Para B.3.1.3.1. of the 2021 UN Transfer Pricing Manual states “There are two general categories of methods. “Traditional Transaction Methods”, consisting of the Comparable Uncontrolled Price, Cost Plus and Resale Price Methods. The “Transactional Profit Methods” consist of the Transactional Net Margin Method and the Profit Split Method. A number of jurisdictions also apply “other methods” which are considered to provide arm’s length results; however, it needs to be ensured that such methods are consistent with the arm’s length principle.”
4 All APA reports can be accessed at https://incometaxindia.gov.in/Pages/international-taxation/advance-pricing-agreement-reports.aspx
DISCLAIMER: The contents contain general guidance on developments on the subject, and specific professional advice should be sought before acting on them. Contents transmitted to the recipient are confidential, legally privileged, and intended solely for the use of the individual or entity to whom they are addressed. If you are not the intended recipient, you are notified that disclosing, copying, distributing, or taking any action in reliance on the contents of this information is strictly prohibited under the law, and the sender shall not be liable for any losses. Unless related to BMR Legal business, the information contained within this document is that of the sender alone and does not necessarily constitute that of the Law Firm.