|
India,
S'pore to tighten watch on capital flows
Economic Times
SUBHOMOY
BHATTACHARJEE & G GANAPATHY SUBRAMANIAM
TIMES
NEWS NETWORK[ TUESDAY, JUNE 14, 2005 02:02:20 AM]
NEW
DELHI: India's concern about keeping a track on the sources
of international capital flowing into the economy, is
expected to be addressed by adding an information sharing
clause in the India-Singapore Comprehensive Economic Cooperation
Agreement (CECA).
The
clause is almost a last minute addition to the much-discussed
CECA insisted upon by the Indian government. The agreement
is likely to be inked by the two countries by the end
of this month, when the Singapore Prime Minister is slated
to visit India. The clause would broadly ensure that any
information furnished by an economic entity operating
in Singapore to the government there could be asked for
by the Indian government too.
This
implies that India can cross-check information furnished
by foreign institutional investors, hedge funds, or even
banks, planning to enter India, with those that they have
filed with the Singapore authorities. The same facility
would also be available to the Singapore government from
India. Since Singapore is a significant hub for international
finance, a number of global financial entities operate
in the island.
India
is concerned that the detailed financial regulatory mechanism
it has built under the Reserve Bank of India and the Securities
and Exchange Board of India, could be short-circuited
by entities misusing the mutual investment route being
opened under the CECA. Accordingly, it has sought incorporation
of the information sharing clause in the agreement. However,
this has created a hitch as Singapore has complained that
the afterthought has come too late in the day.
Various
disputes on the pact were raised earlier too, but they
were ironed out after the Prime Minister's Office stepped
in.
India's
anxiety on the origin of capital flows partially stems
from its experience with the Double Taxation Avoidance
Agreement (DTAA) signed with Mauritius in the 1980s. A
DTAA with Singapore has already ironed out many of the
glitches, but the Indian government wants to extend information
sharing avenues to cover all aspects as done by CECA.
Singapore-based companies have large investment funds
but attractive investment avenues have dwindled. India
has been seeking to draw in big overseas investments,
and the CECA exploits the convergence of the needs of
both the sides.
It
includes a Free Trade Agreement, an air services agreement
and a bilateral investment promotion and cooperation agreement.
Top |
