Singapore overtook Mauritius as the biggest FDI investor for this financial year.
Still, the FDI from Mauritius is higher than many other economic superpowers such as USA, China, Japan etc.

The simple reason is because Mauritius is a tax haven and has signed double taxation avoidance agreement with India.
What is a Tax haven?? It is a country with very minimal, almost zero tax regime. Just like Monaco, Bahamas, Luxemborg etc..

                2012-2013                 2013-2014
Mauritius 40% (9.4 billion $) 20%(4.9 billion $)
Singapore 10%(2.3billion $) 25%(5.98 billion $)
Netherland 5%                      5%

The reason for high investment is because, the money invested from Mauritius is nothing but the Black money which was embezzled out of India via hawala transaction and laundered as tax free white money which our government allows it to invest in India, for further scope of tax embezzlement and black money generation.It is popularly called as the Mauritius route. It is triply harmful to our Indian economy.                                                                                                   DTAA, is an agreement wherein, it allows the investor to pay tax in his resident nation, in this case Mauritius, so the corporations pay zero tax in Mauritius and get tax exemption in India.                                                                                           Investment from Mauritius , Singapore and Netherlands account for Around 50% of FDI in india .

This is because these countries are tax heavens and have Tax treaties with India. However these countries being small doesn't have capabilities to invest so much in India.
So from where so much money is coming?
It is believed that third party companies are routing there money from these Tax heavens to India to avoid Taxes and conceal the identity of Original Investors.It is also believed that black money from India is re-invested in Indian companies through this route which is known as round tripping .

Such Investment make illegal use of Double Taxation agreement between India and these island nation . Once Tax is collected in these countries (which is meager in amount) ,tax liability to Indian government is avoided .                                           This way Identities of investor is concealed from the revenue authorities of the ultimate investors, many of whom could actually be Indian residents, who have invested in their own companies .                                                                                                                                                                                                                 How to control it, the government should pass General Anti Avoidance Regulation or GAAR, which would empower the government to check the investments of companies getting an annual tax exemption of more than 3 crore a year.