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The governments of Singapore and India have been working extensively for strengthening the international business relations between two countries by bringing in new amendments. There are various steps to improve trade and investment and multiple schemes are being formulated that provide a favourable trading environment to investors.
Singapore is one of the top investors in India for almost two decades. India and Singapore enjoy healthy and stable trade relations and are a good example of bilaterally beneficial trade in the global trade system.
Foreign Direct Investment Ratio between India and Singapore
Over the years both the countries have actively participated in actions that helped in increasing trade and investment both ways. Both India and Singapore have flexibly changed their existing trade regimes and even created new rules to increase foreign direct investment.
Data Source: https://dipp.gov.in/
India and Singapore share a common approach on economic opportunities and interests in matters of trade and investment.
With growth in different sectors, it is evident that there are some prominent companies that have played a key role in foreign investment in India. They are: APL Logistics India Pvt Ltd, DBS Bank India Ltd, Flextronics Technologies India Pvt Ltd, L&W Construction Pvt Ltd, Olam Agro India Pvt Ltd, Singtel Global India Pvt Ltd and United Overseas Bank Ltd.
Leading Singaporean companies in India
Several Indian start-ups like Flipkart, although operating in India, have registered holding companies in Singapore to benefit from increased funding opportunities.
Leading Indian Companies in Singapore
India’s ranked at 63rd position in 2020. The country’s ranking on the World Bank’s Doing Business Report (DBR) of 190 countries, has improved from 142nd position in 2014 to 63rd position. It has earned a place among the world’s top 10 improvers for the third year in a row.
Trade across Borders: India has simplified starting a business by incorporating electronic memorandum of association and articles of association. India currently ranks as a substantial nation for cross border trade and business investment by the World Bank Cross border trading has now been simplified with the start of post-clearance audits, upgrading port infrastructures, and enhancing the electronic submission of documents.
Custom Clearances: The Central board for excise in customs (CBEC) has simplified Indian customs single window project to facilitate trade. This enables one step submission of custom clear documents on an online portal. Only three mandatory documents are required for customs purposes. Computerized transactions have reduced risks and created a simplified system wherein, chances of inspections have been reduced.
Infrastructure Development: There has been an increase in infrastructure development projects due to reduction in the time and cost of obtaining construction permits. Various municipal corporations in metro cities of India have developed a fast-track approval permit for building projects. Cost of obtaining construction permits has reduced from 23.2% to 5.4% of the economies per capita. These provisions were enabled to ease the process of doing business in India and reaching out to investors around the globe.
Resolving Insolvency: Issues like resolving insolvency have been made easier by promoting reorganization proceedings in practice. As a part of Ease of Doing Business in India, the country has strengthened access to credit by amending its insolvency law. Secured creditors are now given absolute priority over other claims within insolvency proceedings.
As a part of ease of doing business in India, the country has strengthened minority investor protections by increasing the remedies available in cases of prejudicial transactions between interested parties. India made enforcing contracts easier by introducing the National Judicial Data Grid, which makes it possible to generate case measurement reports on local courts.
Paying Taxes: To promote ease of doing business, India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer.
The Employee State Insurance Corporation (ESIC) has developed a fully online return filing with online payment. Due to the introduction of e-verification system, there is no physical touch point for document submission with the income tax authorities.
Business Reform Action Plan (BRAP) 2019 – 372 new action plans were introduced under the BRAP 2019. It included new sectors such as Healthcare and Hospitality, Central Inspection system, Trade License, Registration under Legal Metrology, and Registration of Partnership Firms & Societies. This reform includes the future plans and growth of previous plans by the states and union territories in India.
The Government of India has worked on creating a conducive environment by streamlining the existing regulations and eliminating unnecessary requirements and procedures to help businesses grow. The focus is on reduction in compliance burden by using technology, third party assessments, and faceless human intervention.
Key agreements of cooperation between India and Singapore:
Comprehensive Economic Cooperation (CECA)
The Comprehensive Economic Cooperation Agreement (CECA) of 2005 is a free trade agreement between India and Singapore. Second review of CECA was launched in May 2010 and was completed in 2018. This agreement elevated after 2015, ever since the two nations have started relaxing various norms to increase trade and investments. In 2018, Singapore became the top foreign investor in India surpassing Mauritius.
Upcoming Agendas: May-June 2018 witnessed over 35 concrete outcomes in a meeting between leaders of the two nations. Some of the key decisions included:
1. Singapore Mediation Convention 2018: India was one of the first signatories of the Singapore Mediation convention by the United Nations. This convention aims to resolve cross border disputes and increase international trade between different nations. The countries that are ratified under the settlement will be able to avail expedient settlement options when multiple jurisdictions are involved. India, by singing this settlement convention has taken a step forward for increasing international trade relations and handling the disputes that can arise!
2. Online Dispute Resolution (ODR) mechanism: Singapore court is one of the annexed courts for ODR platforms in India. ODR is often seen to be an online version of ADR. Singapore Mediation Centre provides for neutral evaluation of the case as a mechanism separate from, and in addition to, arbitration and mediation.
In the Singapore State Courts ODR programs, agreements require the consent of the court in the form of consent orders.
1. MoU on IPR
India and Singapore had signed a memorandum of understanding on Intellectual Property in 2016. The MOU was signed by Department of Industrial Policy and Promotion (DIPP) and the Intellectual Property Office of Singapore (IPOS). This step is expected to increase understanding and trade in matters of various intellectual property including trademarks, patents, and copyrights. The MOU included various objectives to improve the present relations of the nations regarding intellectual property. This was the first step taken towards improving IP relations between India and Singapore.
Objectives of India – Singapore MoU on IPR
2. India and Singapore: Stepping into Future
Five areas of cooperation popularly referred to as 5-S Plank were agreed during the visit of Indian government leaders to Singapore in August 2014. The goal was to enhance and direct bilateral relationship between the nations. These 5 planks of a strong trade relationship between the nations are:
5-S Plank
3. India- Singapore: The Next Phase
India’s first International Business & Innovation Summit on 09-10 September 2019 was organized in collaboration with the Government of Singapore. This two-day innovation and business summit also included the third edition of the India-Singapore Innovation and Start-up platform – InSpreneur.
Approximately 250 start-ups participated from both the nations. Major participation was seen from the Indian entrepreneurs and a step towards collaboration of businesses between the two nations. Singapore highlighted how India is now the third largest start-ups market in the world and with a growing workforce it can soon transform its digital sector. Fintech and Healthtech were identified as two leading start-ups in both the countries and a collaboration of such kind is significant for the growth of both nations.
Double Taxation Avoidance between India and Singapore
In 2011 the double tax avoidance agreement (DTAA) was signed under CECA between India and Singapore. The agreement covers tax residents of Singapore and India. It covers income tax earned by the residents of both the nations. The agreement does not apply to shell companies, the shell companies are mere non-operating bodies with no real or contentious business activity records.
Any Singapore based company that has a permanent establishment in India; the profit attributable to the permanent establishment will be taxed only in India. And the same process will apply to any Indian company established in Singapore.
Exports to Singapore in India averaged 26.09 INR Billion from 1991 until 2021, reaching an all-time high of 143.61 INR Billion in March of 2019. It is approximated that by the end of the year 2021 the total ratio will cross USD 21 Billion.
There are eight Indian banks all over Singapore with various branches:
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