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The Singapore FactorSee the full content of this document
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Business News
A big step forward in India's Look East policy, the India- Singapore economic agreement opens up new vistas in trade relations.
By Shailesh DobhalMore than three years after the two countries first started talking about it, India and Singapore were slated to sign the Comprehensive Economic Cooperation Agreement (CECA) when this magazine went to press. The agreement, to be signed by Indian Prime Minister Manmohan Singh and his Singaporean counterpart, Lee Hsien Loong, is more than just another accord. The CECA is the first agreement of its kind that India has signed with any country, and is vastly more than the free trade agreements (FTAs) that it has signed earlier with countries like Sri Lanka and Thailand. The CECA with Singapore, in fact, encompasses an FTA for goods and services, a bilateral investment promotion treaty, an improved Double Taxation Avoidance Agreement, and an air services agreement.Opinion is divided on just how much manufactured exports from India, currently at $2.65 billion, or Rs 11,660 crore, (April- December, 2004), will gain from the CECA. Some say not much because Singapore already offers zero duty on most goods imported into the country. However, Assocham estimates that there's potential to grow trade between the two countries to $50 billion, or Rs 2,20,000 crore by 2010. Says Assocham's President M.K. Sanghi: "India-Sinagpore trade is already growing almost 50 per cent year-on-year. So, an eight-fold increase in India-Singapore trade is not an impossible scenario."There are no two opinions when it comes to investments. In a sweeping concession, India has agreed to give three Singaporean banks-DBS Holdings, Overseas Chinese Banking Corporation and United Overseas Bank-unfettered access to Indian banking, on par with domestic banks. In addition, it has increased investment limits applicable to institutional investors like private equity investor Temasek Holdings and the Government of Singapore Investment Corporation. That means more of Singapore's (the city-state is already the third largest foreign investor in India) surplus cash can be ploughed into Indian companies. Experts reckon that in the first year alone (starting August 2005), Singapore's FIs could invest as much as $5 billion, or Rs 22,000 crore, in the stock markets, and $2 billio...See the full content of this document
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