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FDI
Singapore’s investment in India
The CECA became operational from August 1, 2005. India was expecting a 300 per cent increase in its foreign direct investment from Singapore in the first year of the implementation of the CECA, cleared by the Union Cabinet in June 2005. According to Commerce and Industry Minister Kamal Nath, FDI inflows from Singapore were expected to touch US$ 2 billion while Foreign Institutional Investment was expected to increase to US$ 5 billion in the first year.
Singapore’s investment in India
Approved FDI from Singapore
According to the Secretariat for Industrial Assistance of the Department of Industrial policy & promotion of India, cumulative investment from August 1991 to March 2006 is almost US$ 1 billion. This makes Singapore the seventh largest source of FDI into India.
Singapore was the 3rd largest source of investment for India in 2005 investing over US$ 317 million.
The top 5 sectors attracting FDI from Singapore in India include telecommunications (17.93%), services (financial & non-financial) (16.28%); electrical equipments (including computer software & electronics) (12.4%), fuel (power & oil refinery) (11.12%), and transportation industries (8.85%).
However, Singapore’s investments in India are likely to have been understated so far, as many overseas investments into India were routed through Mauritius to take advantage of the favourable DTA between the India and Mauritius. For example Singtel made an US$ 1.07 billion investment in India through a Mauritius entity in 2000, for a stake in Bharti Televentures and a joint venture with Bharti Enterprise for an undersea cable linking India and Singapore. It may be noted here that the total value of FDI received in India through Mauritius is US$ 9 billion.
India's Double Taxation Avoidance Agreement (DTAA) with Singapore is now modeled more on the lines of the existing treaty with Mauritius, with exemption for capital gains tax on profits from sale of shares built into the agreement. Singapore will probably turn out to be India's Hong Kong and there could be a shift in FDI from Mauritius to Singapore.
Both companies linked to the Singapore Government, and the Singapore private sector (including NRIs) have invested in a wide variety of projects in India such as logistics, electronics, software, health services, construction, industrial parks and other real estate linked projects. Various MNCs are routing their investments in India through their Singapore subsidiaries. In addition, a number of international investment banks, chartered accountancy and management consultancy firms have made Singapore their regional headquarters for servicing the Indian market.
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