India - Singapore Economic and Commercial Relations

Singapore is India's largest trading and investment partners in ASEAN. The increasingly close relations between India and Singapore in recent years have been underpinned by a dramatic growth in bilateral trade and investment linkages. India is looking for infrastructure investments, critical technologies and export markets. Singapore has surplus capital and could be a useful partner in infrastructure development in India as well as investment in Indian companies.

Prime Minister Atal Bihari Vajpayee visited Singapore in 2002. One major outcome of the visit was the setting up of a India-Singapore Joint Study Group (JSG) to look into the possibility of concluding a Comprehensive Economic Cooperation Agreement (CECA) between the two countries. The JSG, submitted its report in April 2003 during the visit to India by Prime Minister Goh Chok Tong. It identifed areas of increased economic engagement between the two countries and also recommended measures to be taken. Keeping the report of the JSG as a basis, negotiations between the two governments have commenced. A negotiating team headed by the Commerce Secretaries of the two countries has been set up to finalize the CECA. The team has held Seven rounds of discussion till Jan 04.

TRADE

Major items of India's Exports:

The major items of India's exports to Singapore in 2003 were Crude petroleum, Refined Motor spirit, Petroleum oils, Polished diamonds for jewellery, Polished industrial diamonds, articles of Jewellery, Aluminum Unwrought, Aluminium sheets, Parts & accessories of computers, Synthetic fabrics, Silk fabrics, Embroidery/Table linen of Man Made Fibres, Combed cotton, Knitted T-shirts, Vests, Benzene, Dyes, Acids, Insecticides, Fungicides, Household articles of stainless steel, Corrugated products of iron and steel, Forged/stamped articles of iron and steel, Bars and Rods of iron steel, Parts of Boring or Sinking machinery, X-ray tubes, Medical Surgical Dental or Veterinary instruments/ appliances, Penicillin, Rice, Sugar, Cashew nuts, Essential oil, Crabs live/dried, Fish (fresh/chilled/dried), Titanium ore, Menthol, Diesel/semi-diesel generating sets, Static converters, Valves/Taps Cocks for Pipes, Boilers, tanks etc, Bus/lorry tyres, Tobacco. These items in value terms constitute over 70% of India's exports to Singapore.

Major items of India's Imports:

The major items of India's imports from Singapore in 2003 were parts and accessories of Computers and Computer peripherals, Integrated Circuits, Cellular phones, CD Roms, Styrene, P-Xylene, O-Xylene, Polypropylene, Vinyl Acetate, Topped Crudes, Parts of boring and sinking machinery. Nickel, Tin (unwrought), lead (unwrought) Aluminium (unwrought) Zinc (unwrought), Waste & scrap of Iron and steel, Photographic chemicals, Sewing Machines, Ball/Roller bearings, Parts for bulldozers, Parts of Aero planes/Helicopters, Parts for Audio/Video recorders, Medical instruments and appliances, parts of cellular phones, parts of motor vehicles, Cigarettes, pigments, Parts of Cathode Ray Tubes, Auto parts, parts for electrical Machines & apparatus. These items in value terms constitute over 60 % of India's imports from Singapore.

India - Singapore Trade:

Total trade between India and Singapore has been steadily increasing since 1999. The trade between India and Singapore increased by 3.22% (in 2001), to S$ 6.88 billion, and decreased by 1.16% (in 2002). On comparing the trade figures of 2003 with 2002, it is seen that total trade has gone up by 16.20%. India's Imports from Singapore have increased by 14.22% and exports to Singapore by 21.25%.

Over a period of 5 years India's imports from Singapore have increased by 26.88 %, whereas, during the same period India's exports to Singapore have increased by 100.8 %.

Moreover, it may be noted that most of Singapore's exports to India consists of re-exports, which constitutes slightly over 50% of Singapore's exports to India.

INDIA - SINGAPORE TRADE

Balance of Trade:

The balance of trade has remained in favour of Singapore since 1999. However despite growth in bilateral trade, the balance of trade in favour of Singapore has more or less remained same for the last five years in value terms (in S $). Indian exports to Singapore have been steadily increasing, growing in S$ terms by 48.8% (2000), 7.52% (2001) and 3.5% (2002), and 21.25% (2003).

COMPARISON OF TRADE BALANCE BETWEEN INDIA AND SINGAPORE

INVESTMENT

Singapore has emerged amongst the top foreign investors in India. During the period January 1991 to May 2003, approvals for Foreign Direct Investment from Singapore to India (excluding NRI and euro issues/portfolio investment) amounted to Rs.53 billion (approx USD 1.2 billion,) making Singapore among the largest foreign investors in India. Annual break-up since 1995 of Singapore's investment, and share of total FDI (excluding NRI and portfolio investment) in India, is as follows:-

APPROVALS FOR FDI IN INDIA

Singapore investments:

Some of the Govt-Linked Corporations (GLCs) of Singapore's projects include Ascendas' Information Technology Park in Bangalore, the participation of the Port of Singapore Authority (PSA) in both equity (40%) and management of Pipavav Port, Gujarat, PSA's 30-year contract for operation and management of the Tuticorin Port, Singtel's joint venture with Bharati Telecom and Singapore Technologies Telemedia's JV with ModiCorp. The Government of Singapore Investment Corporation (GIC) has registered itself in India as an Financial Institutional Investors, and has committed Rs. 119 million in HDFC Ltd. Apart from investing in other stocks and equities.

The GIC along with other investors has invested Rs.11 billion (S$407 million) for a 13.6 percent stake in India's ICICI Bank as it's strategic partners. In Dec 03 Temasek holdings has acquired a 5.2% stake costing around S$342.2million in ICICI Bank. In January 04, Temasek Holdings, Singapore Government's investment arm, bought a stake in Matrix laboratories, Hyderabad for S$114.7million, thus getting a 14% equity stake in the company.

Merlion - India Fund

Temasek and StanChart Bank formed the Merlion - India Fund of US $ 100 million for investing in mid to late stage Indian Companies. The fund does not cover investment in infra - structure, real estate and trading. This fund was set up for the purpose of Singapore companies investing in Indian companies expanding in India and abroad. The fund has invested (in December 03) S $ 35 million to a 5.46% stake in Aurobindo Pharma, Hyderabad.

Source: Indian High Commission, Singapore