1. Singapore is India’s largest trade and investment partner in ASEAN. The economic and commercial ties between the two countries have expanded significantly in recent years, particularly after the conclusion of the CECA in 2005.  From the Singapore perspective, reaching out to a liberalizing Indian economy is a continuation of the leapfrogging strategy in effect since 1965 that seeks significant partners beyond its immediate neighbourhood.  For India, Singapore constitutes a bridgehead into the ASEAN, and if developed fully, perhaps into East Asia as well.  It has become a preferred centre of operations for Indian companies active in the Asia Pacific region.  The growth of banking and finance industries makes Singapore relevant to the raising of resources, particularly for global operations.   Incentives provided by Singapore and its competitive tax regime have encouraged Indian companies to set up both manufacturing and servicing operations on the island.  Combined with a positive enabling environment, strong air connectivity and the presence of a large Indian community, Singapore shows every sign of emerging as the key offshore hub for Indian corporate.  

Comprehensive Economic Cooperation Agreement

2. Concluded in June 2005, CECA is the first such agreement to be reached by India with any country.  It integrates agreements on trade in goods and services, investment protection, cooperation in fields like education, intellectual property and science & technology. It also provides mutual recognition agreements that will eliminate duplicative testing and certification of products in sectors where there are mandatory technical requirements.  As part of CECA, a  protocol amending the DTAA was signed wherein special benefits were provided for Singapore. CECA also provides for dispute settlement procedures and recourse to arbitration in certain contingencies.  Annexes to the CECA set out detailed information including list of products for tariff reduction/elimination, certification and testing as well schedules on specific commitments.  Composed of 16 Chapters, the major issues dealt with by CECA include trade in goods (Chapter 2), rules of origin issues (Chapter 3), customs cooperation (Chapter 4), mutual recognition agreements on standards and technical regulations, sanitary and phyto-sanitary measures (Chapter 5), investment protection (Chapter 6), trade in services and movement of professionals (Chapter 7), air services (Chapter 8), movement of natural persons (Chapter 9), E-commerce (Chapter 10), IPR (Chapter 11), science & technology (Chapter 12), education (Chapter 13), media (Chapter 14), dispute settlement (Chapter 15) and implementation procedures (Chapter 16). The implementation of CECA is periodically reviewed by the two Governments and the closure of the first Review was announced on 1 October 2007.  Issues addressed during the review included expansion of coverage of tariff concessions, implementation of MRAs, facilitation of movement of professionals, expanding market access to financial services and furthering IPR cooperation. At a Ministerial level meeting in New Delhi in 2008 the road map for the future, subsequent to the implementation of CECA was unveiled. Its main features are as follows:

Second review of CECA was launched in May 2010 during the visit of Singapore Minister for Trade and Industry to Delhi and it is expected to be completed by end of 2011.

Bilateral Trade

3. Bilateral trade has expanded significantly since the conclusion of CECA and has reached SGD 30.667 billion in 2010; Bilateral trade target of S$ 50 billion by 2012 was set during a meeting in New Delhi on 23 June, 2008 between Indian Commerce & Industry Minister Mr. Kamal Nath and Singapore’s Trade and Industry Minister Mr. Lim Hng Kiang. Trade trends for the last five years is as under:

SINGAPORE-INDIA BILATERAL TRADE
Source: IE Singapore,

In million Singapore dollars
4. Major items of India’s exports to Singapore in 2010 include :

These items constitute 77.57% of India’s total exports to Singapore
5. Major items of India’s imports (domestic & re-exports) from Singapore in 2010 include:

These items constituted 34.76% of India’s total imports from Singapore.

6. Greater familiarity and growing confidence has encouraged Singaporean companies to also expand their Foreign Direct Investment in India.  According to the figures, Singapore stands at the second place with an FDI inflow of  US$ 11.639 billion during the period April 2000 to December 2010 and accounts for 9.21% of total FDI inflow into India.    Some of the major investments are as below

  Ascendas has established IT Parks in Bangalore, Hyderabad and Chennai and is involved in the development of Mahindra World City in Chennai.  It is also developing Special Economic Zones in other parts of India. Port of Singapore Authority (PSA) are operating the container terminal in Tuticorin Port and have just assumed similar management responsibilities in Chennai Port. Sembawang Shipyard, a unit of Sembcorp Marine and Kakinada Seaports are forming the joint venture company, Sembmarine Kakinada Ltd (SKL) to establish and operate a marine and offshore facility on the east coast of India between Vishakhapatnam and Chennai Port.  Changi Airports International (CAI), the international arm of Changi Airport Group has acquired a stake of 26% in Bengal Aerotropolis Projects Ltd (BAPL).Singapore Airport Terminal Services (SATS) have a joint venture with Taj to provide in-flight catering services in Mumbai, Kolkata and Delhi.  They have also secured contracts for cargo and ground handling services in Bangalore and Hyderabad.  Gateway Distripark Logistics (GDL) from Singapore has emerged as the largest private container freight station operator in India with terminals in Nhava Sheva, Delhi, Vizag and Chennai while other logistics companies are active in Pune, Mumbai and Jamshedpur.  Other prominent investors include Asia Pacific Breweries who have invested in Aurangabad Breweries, Parkway Healthcare who have a joint venture hospital with the Apollo Group in Kolkata, Flextronics which has an electronics industrial park, eSys which has set up an IT component manufacturing facility, Capitaland and Kepland who are both active in real estate projects and Jurong Consultants who design SEZs.  Sembcorp tied up with Gayatri Industries to set up a thermal power plant in Krishnapatnam with estimated investment of USD 1 billion. The 3i Group through its Indian infrastructure investment arm invested $182 million in GVK Energy, a wholly owned subsidiary of GVK Power and Infrastructure Limited. Temasek Holdings will be investing USD 200 million in GMR Energy through its wholly-owned subsidiary Claymore Investments (Mauritius) Pte. Ltd. Singapore Airport Terminal Services (SATS) has entered into a joint venture with National Aviation Company of India Limited (NACIL) to provide ground-handling at four major airports in India.

7. The Indian corporate presence in Singapore has also grown significantly and 3800 Indian companies have registered their presence with the Government.  All the IT majors have a strong presence and use Singapore as a base for larger regional operations.  The two most prominent manufacturing ventures are the Natsteel owned by the Tata Group and Punj Lloyd’s takeover of Sembawang Engineers & Constructors.  Recently Fortis Healthcare acquired a 23.9% stake in Parkway Holdings of Singapore which was later sold. GMR Holdings Private Limited (GMR Group), an India-based infrastructure group, has signed an agreement to acquire 100% stake in Island Power Company Pte., Ltd., a Singapore-based wholly-owned subsidiary of Netherlands-based InterGen N.V which is setting up a power plant with an estimated investment of 1 billon SGD. A number of niche manufacturers and trading companies have taken advantage of the favorable business conditions to establish operations in Singapore.  Nine Indian banks operate in the country – Bank of India, Indian Overseas Bank, UCO Bank, Indian Bank, Axis Bank, State Bank of India, ICICI, EXIM Bank and Bank of Baroda. SBI was granted Qualifying Full Bank  (QFB) status by Monetary Authority of Singapore (MAS) in March 2008. ICICI Bank has become the second Indian bank after State Bank of India in Singapore to be given the QFB status.  During the visit of External Affairs Minister to Singapore in June 2007, CII India Business Forum (IBF) was set up.  This initiative is aimed to create a platform for Indian companies operating in Singapore to discuss issues of mutual concern.

Civil Aviation

8. Directly connected currently to 11 Indian cities, Singapore has the strongest air connections to India. There are 191 scheduled direct weekly flights with a seat capacity of 48,000 (approx) operated by four Indian carriers (Air India, Air India Express,  Jet Airways and Kingfisher) and three Singapore carriers (Singapore Airlines, Silk Air and Tiger Airways), though the airlines have recently cut down the frequencies on account of lower passenger load on account of global economic slowdown. In addition, four other carriers (Malaysian, Cathay Pacific, Thai and Air Lanka) operate approximately 80 indirect flights with a seating capacity of 15,400.  Cities covered include Chennai, Bangalore, Hyderabad, Kochi, Delhi, Mumbai, Ahmedabad, Amritsar, Trivandrum, Kolkata, Trichy and Coimbatore.  The Bilateral Air Services Agreement was last reviewed in January 2007 when new schedules, points and capacities were negotiated.  Singaporean companies continue to evince strong interest in India’s civil aviation sector.  SATS has contracts covering catering services, ground services and cargo handling in various Indian airports.