The Government of India has penned down a tax avoidance agreement with Spain that will facilitate exchange of information on tax evaders in the two countries.

Apart from preventing tax evasion, the agreement will also facilitate avoidance of double taxation. The agreement was signed by Finance Minister P Chidambaram and Span's Foreign Minister Jose Manuel Garcia-Margallo Marfil.

Chidambaram said that the agreement would reduce obstructions in collection of information, prevent the abuse of the convention's benefits, and help in collection of taxes.

India also asked Span to make investments in the proposed National Manufacturing & Investment Zones (NMIZs), and boost cooperation in sectors like information technology, agro-processing, and renewable energy.

Industry Minister Anand Sharma said that there was a need to take more steps to strengthen economic ties between India and Spain as trade and investment between the two countries were below the potential.

Encouraging Spain to invest more in India, he said, "We have notified 10 NMIZs and for master plans have been approved for seven of them. This is where Spanish companies are welcome."

NMIZs will be India's mega-industrial zones that will offer world-class infrastructure and a host of incentives from government, such as exemption from capital gains tax.