Businesses in Singapore see India as the best bet for return on investments due to its large market and growing middle-income class and there is a recognition that the Comprehensive Economic Cooperation Agreement (CECA) provides an effective bilateral trade framework for the two countries to explore their synergies, according to the head of a leading think tank here.
Iqbal Singh Sevea, director at the Institute of South Asian Studies at the prestigious National University of Singapore, also said, “The CECA itself has been through several reviews and updated regularly. As a result, a series of systems and processes have been established.” There was a recognition that the CECA provides an effective bilateral trade framework for India and Singapore, he said.
The India-Singapore CECA entered into force on August 1, 2005.
He highlighted that Singapore has emerged as the largest contributor to Foreign Direct Investment in India. Singapore with 27.01 percent and the USA with 17.94 percent have emerged as the top two source nations in Foreign Direct Investment (FDI) equity flows into India in FY2021-22, the Ministry of Commerce and Industry said on July 28.
“This is consistent with Singapore businesses finding India an attractive long-term business proposition. Long-term returns from India have been among the highest from emerging markets due to its large market and growing middle-income class,” he noted.
Major Singapore businesses including Ascendas, Keppel, Singapore Airlines, Port Authority of Singapore, Sembcorp, Singtel, DBS Bank, agri-based Olam group, and UOB have bet big on India. “The physical on-ground presence of these companies has been complemented by equity investments by Singapore’s major Government Linked Companies (GLCs) such as state-owned investor Temasek group,” Sevea said.
“The trend is expected to escalate in the future as Singapore and Indian businesses continue to explore synergies in complementary areas like AI, technology, healthcare, clean energy, sustainability, urban solutions, and retail,” Sevea elaborated.
There is a growing interest in boosting technology ties between India and Singapore. “India is a tech powerhouse and key Indian tech companies like Infosys and TCS, a Tata group’s consultancy company, have long had partnerships and a presence in Singapore.
“FinTech is a highly promising area where the scope for further cooperation is high. The growing digitization of finance through public payment platforms (like India’s Unified Payments Interface) can serve as a bridge for Singapore’s banks and financial institutions to expand their presence and reach customers in India,” Sevea pointed out.
The Monetary Authority of Singapore (MAS) and the Reserve Bank of India will link Singapore’s PayNow and India’s UPI real-time payment systems. This PayNow-UPI linkage will enable users in both countries to make instant low-cost payments and financial transfers directly from their banks in Singapore and India. “Once implemented, payments and financial transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses. “PayNow and UPI could become integral components and lynchpins of their national digital infrastructures; this vital link between both systems also enables more comprehensive digital connectivity and interoperability between India and Singapore,” he underlined.
Indian businesses have always found Singapore an extremely attractive location, observed Sevea. More recently, several Indian start-ups that are looking for investments from venture capitalists have been registered out of Singapore. These include Flipkart, Mobilink, and InMobi.
Singapore’s excellent start-up ecosystem is a great attraction for talented young Indian entrepreneurs looking to raise external resources. Moreover, by coming up in Singapore, these businesses can develop footprints in the region. “We are, thus, witnessing several new Indian start-ups in domains such as EdTech and FinTech adopting this strategy. This is a move-up from the earlier strategy whereby Indian companies would invest in Singapore and maintain representative offices for conducting business within Southeast Asia. “There is no doubt that the presence of Indian banks like SBI and ICICI that are doing retail business, and almost all other major Indian banks involved in corporate business, in Singapore serves to further facilitate such developments,” said the director of ISAS, one of the most forward think-tank of the Singapore Government.
On digital technologies, ISAS has been tracking how the Indian government is regulating new and emerging technologies and their implications for India’s economy and foreign policy. The focus has largely been on three areas: Data Governance, Cybersecurity, and Artificial Intelligence. “Policy work on these three areas, with a focus on laws and policies, helps us understand the motivations of how New Delhi would like to shape its digital economy and digital footprint globally, and the implications of those policies for domestic actors and other countries like Singapore,” stressed Sevea.
“A robust and refined understanding of how India regulates various technology issues also enables us to understand its technology and digital diplomacy and the positions India adopts at global and regional fora on matters like data, cybersecurity, AI, social media, and disinformation. “As a rising power with immense economic and geopolitical clout, how India behaves globally on tech issues deeply matters to the balance of power in Asia and integrating further with Asian partners like Japan and Singapore that are keen to further cooperate on such emergent tech issues bilaterally and through regional mechanisms like the Quad.
Given India’s economic, geopolitical and demographic position, it is at the heart of much of the research conducted at ISAS. “In addition to studying developments in India from the national perspective, we also focus on individual states in India. For instance, we are attentive to economic initiatives undertaken by individual states,” Sevea shared. “At a broader level, we do not isolate India from the rest of South Asia and global supply chains. Connectivity – be it digital, infrastructural or FinTech – within South Asia and with Southeast Asia is a theme that we have been focusing on,” he said on the eve of hosting ISAS’ International Conference on South Asia from August 1- August 4.
The conference will focus on ’75 Years of Partition: Rupture and Connectivity’. Singapore-born Sevea has been teaching Indian (South Asian) history and politics for over 14 years in universities in Singapore, the UK, and the US. He did his MA at the School of Oriental and African Studies, University of London, and his Ph.D. at the University of Oxford. He was appointed ISAS director on January 1, 2022.
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