CECA: Scaling New Heights of Cooperation between India & Singapore
CECA – at a glance
- Improved avoidance of double taxation agreement
- Tariff elimination or reduction to facilitate trade in goods
- “Rules of Origin” to ensure targeted concessions under CECA
- Good customs procedures to ensure free trade
- Mutual recognition agreements, sanitary and phytosanitary measures
- Market access based on the principle of National Treatment
- Facilitation of broader range of investment instruments such as intellectual property rights protection, business licenses and permits
- Recognising Temasek and GIC as separate entities by the Indian government
- Expanding air connectivity to boost tourism, trade and investments
- Simplifying cross-border movement of natural persons
- Promoting a liberalised environment for e-commerce
- Fostering collaboration in R&D and S&T
India and Singapore share a close bilateral relationship based on the convergence of economic and political interests, which has scaled new heights during the first decade of the 21st century. The economic reforms in India since the early 1990s have created a strong basis for cooperation with Singapore, opening up possibilities for a significant presence in each others’ economies. Additionally, Singapore has played an important role in reconnecting India to the countries of Southeast Asia since the inception of its “look east policy” in the early 1990s.
Background
Singapore, led by then PM Goh Chok Tong, took a major interest in India’s economic reforms in the 1990s. Continued high- level interactions, including the visit of then Indian PM Atal Bihari Vajpayee to Singapore in 2002, culminated in signing of the Comprehensive Economic Cooperation Agreement (CECA) in June 2005, during the visit of PM Lee Hsien Loong to India.
Framework
Apart from CECA, various other agreements concluded between India and Singapore reflect the breadth of cooperation between the two governments, economies and civil societies in either country. These include the double taxation avoidance agreement 1994, Bilateral Air Services Agreement 1968, Defence Cooperation Agreement 2003, MOU on Foreign Office Consultations 1994, and Mutual Legal Assistance Treaty 2005. The India-Singapore strategic dialogue was also constituted in 2007, to promote exchanges at a Track- II level and is led by the Confederation of Indian Industries and the Institute of South Asian Studies, Singapore.
Overview
CECA was the first such agreement to be signed by India with any country, and it integrates agreements on trade in goods and services, investment protection, and economic cooperation in fields such as education, intellectual property and science & technology. It also provides mutual recognition agreements (MRAs) that eliminate duplicate testing and certification of products in sectors with mandatory technical requirements.
After the signing of CECA, economic and commercial ties between the two nations have expanded significantly. So much so that Singapore is now India’s largest trade and investment partner in ASEAN. Bilateral trade reached US$30.11 Billion in 2021-22. In 2023, India received over $17 billion in foreign direct investment (FDI), with Singapore contributing approximately 30% of the total inflows.. In 2021-22, India’s FDI was $58.8 billion, with Singapore being the top contributor among 15 countries
Singapore-based exporters in key sectors of electrical, electronics, instrumentation, pharmaceuticals, and plastics enjoy tariff elimination, or 75% reduction, in exports to India. CECA provides advance rulings on the eligibility of originating goods for preferential tariffs and tariff concession. This provides greater certainty on the status of goods in the country of import. Also, an additional list of tariff concessions have been released for base metal, machinery and mechanical appliances, chemicals, rubber, and textile articles. The margin of preference (MOP) offered by India to Singapore on specific products, is calculated on the most favoured nation (MFN) import duty applicable on the date of import.
Combined with a good enabling environment [politically and economically], strong air connectivity and the presence of a large Indian community, Singapore is a key offshore logistic and financial hub for many Indian companies active in the Asia Pacific region. There are currently approximately 4,000 Indian companies that have opted for Singapore company formation, and trade observers claim it may reach 6,000 over the next two to three years.
According to a recent report by the Singapore Economic Development Board (EDB), Indian companies form the single largest foreign business community in Singapore. Nine Indian banks including Bank of India, Indian Overseas Bank, UCO Bank, Indian Bank, Axis Bank, State Bank of India, ICICI, EXIM Bank and Bank of Baroda, have also setup operations in the city-state.
The implementation of CECA is periodically reviewed by the two governments, and the closure of the 1st review was announced on October 1, 2007.
On June 1, 2018, Singapore and India, in the presence of their respective Prime Ministers, Narendra Modi and Lee Hsien Loong, successfully concluded the second review of the India–Singapore Comprehensive Economic Cooperation Agreement (CECA). This agreement enables the mobility of four categories of business professionals between the two countries. Subsequently, in September 2018, India and Singapore officially initiated the third review of the CECA, emphasizing aspects such as trade facilitation, e-commerce, and customs.
Future
The two countries reaffirmed their bilateral ties and pledged further collaboration in the areas of science and technology as well as education. Singapore Company Registration specialist Rikvin is optimistic that this will pave the way for stronger economic ties between the two countries and benefit firms specializing in two focus areas, boosting employment opportunities for Singaporeans and foreign professionals alike.
Know more about – India-Singapore Bilateral Investments
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