Background of India-Singapore Relations

Singapore

Brief History-Founded and used as trading post for East India Company, hub of British Enterprise in ASEAN-Administrative link with India(Singapore’s penal code was based on India’s)-Achieved internal self-government 1959, independence 1965, British left in 1970s-Basic economic development: Basic industrialization(1966-73), Sophistication and broadening of industrial base(1974-78), Restructuring of economy to higher value-added industries(1979-84)-Start from labor-intensive to inviting investment By 1980s(most heavily foreign-dominated manufacturing sector in the world-LKY visions: opted for free market economy bringing foreign capital investment and utilizing its strategic geographical location as an asset.

Problems face-Separation from Malaysia-Military threat from Indonesia, as Indonesia actually want to conquer Singapore at the period of time-Internal problems, religious and racial conflicts-Rising of China, their influence in ASEAN, communism and effects of Cold war

India

Brief History-Nehruvian era – dream of democratic socialism and commitment to non-alignment-very inward looking policies, government controlled economic growth, not looking outwards, accepting investment or trying to boost economy with the help of international means

Problems-Reeling under effects of Sino-Indian conflict of 1962-struggling with food shortage-cold war tension-domestic problems, Bangladesh war-growing US, China influence in ASEAN

Singapore-India relations

1966Singapore-Singapore government stated their admiration of India policy(both internal and external)-High level visits, LKY visit India 1966,70,71India-Indira Gandhi 1968, Morarji Desai 1969 visit-lukewarm response from India on tentative

Problems and factors-Similar colonial legacy-Singapore need India to neutralize china’s communism-Singapore need India support in economic-India need Singapore as a stepping stone to get into ASEAN-India afraid influence of USA and China undermine their position in ASEAN

security proposal1970(relationship dip)Singapore-Expect India to help in regional security-India response on the focus of economic stability, believe it will indirectly help-Still have high level of visit but not effectiveIndia-Notice the need to step into ASEAN for economic means-Difference in interest, quality(ship, raw material)-Tension free, but never potentially tap on it

Challenges-withdrawal of British troop in ASEAN-Indian workers felt being discriminated(however small case as assurance accepted by India-India face domestic problems such as Bangladesh war-India recognition of Vietnam regime in 1980-Closer ties between USSR and India

1980(back to good relationship)Singapore-Investment into IndiaIndia-Liberalize economy-Go east-economic interaction increases-investment of India companies in Singapore

Challenges-effective investment-both strived towards economic growth

Examples:Singapore investment in India, Singapore trade development board(TDB)India open bank of India representative office

Coming closer

-Cambodia issue cool down after 1988

-Change in politic during Rajiv Gandhi, but relationship between both nation remains close

-aligning foreign policy to economic liberalization

-colonial legacy (same problem face, multi-racial, multi-lingual, multi-culture)

-Security issues, trading ports

India issues

-India Burma (receiving some 600,000 Indians back to India, freezing of assers of India, confiscated by Burmese Government)

-India Vietnam, Recognition affects the political relationship of several ASEAN countries with India

Singapore-India Relationship after 1980s

Singapore

-Singapore looking to open up more, new trajectory in foreign policy emerged-discourse on “economic diplomacy” and maintaining balance of power-emphasis on foreign talent: “India fever”, foreign talents + foreign laborHowever-Singapore face: birthrate drop, growing concerns on foreigners, limited resources-1990, facilitate inflow of foreign talents and focus on locals to become talent and replenish work force-vision of Singapore as a globally competitive knowledge based, innovation driven economy

India

-Indian Pm Rajiv Ghandi revive relations with ASEAN after recognition of Cambodia, visited Indonesia, Thailand..-Narasimha Rao introduces Look East Policy, India focus on economic liberalization, laxing of state’s control on economic, outward looking.-strategic aimed at economic objectives-change of political parties did not change the relationship with Singapore-Unipolar world power led(fall of USSR, emergence of US, influence of China, led to reshuffling foreign policy of India

Four constructive engagements in pursuance of bilateral relations: political, economic, strategic and regional, cultural

Political-strong common characteristic-colonial legacy-India view Singapore’s democratic more in name than in substance, unproductive, restraints on freedoms of expression-Singapore view India as noisy and chaotic democracy, lacking of discipline,-therefore very little political interest

Economic-started with considerable enthusiasm but didn’t take off-India started opening to outside world, Singapore also emphasize in area of tourism to attract India tourist-India initiated moves to enhance economic, joining dialogue partner in ASEAN-LKY express Singapore to act as a gateway for Indian goos to the ASEAN region-1990s break-through-Singapore keen in helping India get closer to ASEAN region

-Technology Park in Bangalore-trade between India and Singapore registered Impressive growth

Strategic Understanding-security of India not extend to Singapore-India generally as a security asset than a liability-play a positive role in regional multi-power balance to contain potential hegemons-LKY suggesting India to go nuclear to balance their situation arising out of China’s acquisition of nuclear capabilities, but India shy-Defense cooperation between India and Singapore such as anti-submarines warfare tactics 1996

Other Common ground

-Singapore foreign policy directed towards regional economic accommodate relations with India and China in similar proportions-Economic interest of SG and economic liberalization in India-Singapore need of foreign talent-cultural complementarities

More examples: Logistic, Health, IT, other sectors, trade and investments

High level of Respect/visits

-Lee Hsien Loong hold talk with Indian FM sought investments for India’s capital market-George yew improve bilateral ties and cooperation in economic and cultural spheres, MOU signed-GOH Chok Tong chief guest at republic day celebration (3 agreement signed tourism, double taxation and sea transport, launch of IT park, start of Indian fever)-Joint naval exercises-India considered Singapore as their window to the word-India set out with policy of trade liberalization- important tariffs and capital controls cut (import duties fell from average of 85% in 1991 to 65 to 25% in 1998)

Long term effects

-Various level of cooperation-CECA-Strong institutional linkage and bilateral relationships-Singapore as the strongest medium between India and ASEAN

Changing Scenario in Bilateral Trade

Factors Leading to CECA

-India economic liberalization-Emergence of Singapore as one of the most important politically and economically stable nation-state in Asia-India’s change from labor intensive to capital intensive productive-structural change in occupation-shift of professions to a dynamic entrepreneurial sector-decreasing regulatory role of the state

-Memorandum of Understanding on economic cooperation signed during President Narayann visit in 2000, but very little progress made-Joint Study Group proposed for a FTA-plus agreement, an integrated package of agreement between India and Singapore:Including- FTA including trade in goods and services and investment

- Bilateral agreement on investment promotion protection and cooperation- Improved Double Taxation Avoidance Agreement- More liberal Air Service Agreement, Open Skies for Charter Flight- Setting up of second India Centre in Singapore, a work program for economic

cooperation

Importance of CECA-Milestone in Singapore-India Relation-Singapore first comprehensive bilateral agreement with a South Asian economy-India’s first agreement with high-income Asian state-Enhance bilateral ties

Features and effects of CECA-Investments-Elimination of India tariffs, expecting a substantial flows of investments from Singapore-Easier transfer of funds for investors for both countries-India government recognized Temasek and GIC as distinct entities allowing each to own up to 10% of a listed Indian company-Indian bank and financial institutions’ right to expand activities in Singapore-Air Service- review and enhance agreement ( SIA and TATA)-Human Movement-Business visitor 2 months with 5 years multiple entry visa, managers and executives 2 years, professionals in 127 categories, 1 year-E commerce - fair treatment of digital products ( Intellectual Property Rights to be promoted mutually)-Education (Educomp Solutions Ltd and Raffles Education Corp)-Media- Greater industry and private sector collaborate (Radio Channel, just Bollywood songs)

Challenges and criticism-Necessity of revision of CECA and addressing many other important issues (2007,2010)-Fewer Foreign Investment from Singapore to India than vice-versa-Issues of migration and skilled labor movement and skilled labor should be addressed better-Private Industry in India raising concern

Traditional India Companies in Singapore-Trading and Financing-Textiles and spicies (main components of trade)-Prominent financiers of colonial Southeast Asia-Chettiars (money lending community)-Prominent Indian business commnunities

Post-independent phase-change of dynamics in trade and investment-loss of homeland links-some prominent names that emerged or survived(Pars Ram Brothers, Tolarams)

Different categories of Indian Business ventures in Singapore-Merger and Acquisition-Collaborations and Joint ventures-Branch offices, representative offices-Headquarters of Asia-Pacific region

India Ventures in Singapore-IT companies TCS, Infosys, Manhindra (regional operations based in Singapore)-Tata motors invest USD 2.5 billion in Singapore holding company to acquire Jaguar land Rover, 3.6nillion to acquire Corus steel-GVK plan of acquiring coal mine in Australia through Singapore-Punj Lloyd taken over Sembawang Engineers and Constructors-Bharti Airtel invest 38 Million in subsidiary in Singapore (Singtel)-GMR setting up power plant with investment of 1 billion

Singapore Ventures in India-IT parks in Bangalore-Temasek holindg investments in ICCI Bank. Bharti Airtel, Tata Tele service-Temasek acquire 100% stake in a Bangalore technology park-Singtel hold stake in Bharti Airtel-Sembcorp invest Rs. 1040 crore in thermal power plant in Krishnapatnam-Capitaland involved in development of malls in about 10 Indian cities-Port of Singapore Authority operating container terminal at Chennai and Tuticorin port-Parkway Healthcare formed JV hospital with Apollo group in Kolkata

Why Singapore?-Business-friendly(Ease of Doing Business Report 2010 shows SG easiest to do business)-Global Competiveness(SG 3rd most-competitive economy according to ‘2010 Global Competitiveness Report, 2nd in 2010 Index of Economic Freedom)-Attractive tax-rates(8.5% up to 300k, 17% above 300, no dividend tax or capital gain/ India 30.9% of INR 10million,33% above )-Openness to trade(ranked 1st in 2010 Global Enabling trade Report by World Economic Forum, including domestic and foreign market access. Efficiency of import-export, quality of services)-Bureaucracy ( 1st as having the most efficient bureaucracy in Asia “ political and Economic Risk Consultancy 2010, india most inefficient)-Living Environment ( Singapore most desirable immigration hot-spot in the world 2010 Potential Net migration Index, HSBC ‘2010 Expat Expereinece Report’ 12th best country in the world-Singapore allows Entrepreneurial Visa Status-Financial Power of Singapore

Why India invest in Singapore-Go east policy,CECA-Economic liberalization-Singapore-India relationship, Singapore being India’s window to the world-Colony legacy-Singapore policy of increasing economic and regional interdependence-Pro-business and family-friendly environment-Low tax-Higher quality of life-Singapore consist of of the largest foreign business community

Why Singapore investing in Indian economy-Economic potential for investment ( China as an example)-Availability of a very large work force( population)-cheap labor-Expanding consumer market-Large body of skilled talents

Facts-4000 Indian companies in Singapore, comparing to 1600 in 2007-Singapore being second largest foreign investory in India $14billion-Singapore is India’s largest trade and business partner in ASEAN, accounted for 30.14% of India’s total trade in 2010-11-Tata-Singapore Airline, opening up of further opportunities, joint ventures-Singapore Investment in India mainly led by GLCs-Collaboration in education sector-Mutual promotion of tourism sector- Mostly directed towards IT and software firms, trading companies logistic, supply chain, education, pharmaceutricals and hospitality business

Prominent Indian Business Associations in SingaporeLocal-Sindhi Merchants Association now Singapore Sindhi Association-Chettiar Chamber of Commerce-Singapore Indian Chamber of Commerce and Industry(SICCI)External-Confederation of Indian Industries (CII) – bridge Singapore-Federation of Indian Chambers of Commerce and Industry(FICCI)-The Indus Entrepreneurs

Importance of business Association in Singapore (IE refers to Indian Entrepreneurs)-one of IE’s networking groups – Network India-Opportunities for networking- Singapore Business Federation-CII- Bridge Singapore and numerous collaborations with SICCI- Pravasi Bharatiya Diva (PBD) held in Singapore( celebrated in India on 9 January each year to mark the contribution of the overseas Indian community to the development of India.)-SICCI appointed official representative in India in2008-Joint initiative of IE and Singapore Indian Business Association

Impact of CECA on private industry of India-Country move from high regulation internally to moderate regulation and protection-India open too fast, news of private meeting among prominent industrialist, share concerns and plan strategy-Put on defensive being allegedly anti-reform and anti-foreign, business discontent mounted-proposed the limit of foreign equity in joint industrial sector-scared of foreign due to British imperialism for such a long time-Business was much dependent on state, suddenly relax of the regulation-Indian business suffered in comparison with MNCs, of its smaller size-Cost of Indian business significantly higher compare to MNCs-ndian firm suffer from handicaps developed under the earlier regime of controls-Indian firms have been at a disadvantage in relation to global economy-Policies that have discriminated in favor of MNCs

-MNCS penetrate the Indian economy though FDI, bought off existing local enterprises with their branded produces with aim of replacing such products-After having acclimatized themselves in India industry, reduce partnership with Indian companies

-a more realistic appreciation of the challenges that liberalization provided through foreign-liberalization too sudden, too hasty-business developed a perception of threat to its continued survival in face of cheaper import-Government unable to do anything

Indian Diaspora in Singapore

Indian communities in Singapore in the colonial period-Laborers, convicts, traders, businessmen-Minority in the demography of Singapore-physical effort for erecting St. Andrew’s Cathedral and the Government house-builders of Singapore, plantation work

Indian Communities in Singapore-slight growth till 9.2% 2010, 7.7% 2000, 1980 6.4%-Languages – Tamil-Religions- Hindu, Islam, Christianity, Sikhism, Buddhism

Post-colonial period-Reconstruction of established economic paradigms in view of rapid industrialization, urban restructuring, education, national policy programmers in Singapore-Minority in demography-Petty shopkeepers, Kallang Airport-monopoly of laundry business-After 1968, settlement pattern altered

Processes: Social movement-Dravidian movement- Indian independence movement- Sino-Indian conflict 1962- Language issues (Tamil as dominant language, future of newspaper in Punjabi bleak)- Indian of different origin divided (North and South)

Factors leading to diaspora to Singapore-Changes by the end of Cold War-resurgence of bilateral relationships, changing economic paradigms of India-Changes in economic trajectories affected Diaspora strategies and human capital movement -Economic compulsions to economic benefits -Migration trends – foreign talent, hard labor -Highly skilled professionals from IT, communications and finance driving the migration -Human capital flows from Indian subcontinents , West-Singapore attractive destination -India economic liberalization and ‘look east’ -Singapore-India colony legacy and relation (Window to the world) -Singapore’s policy of increasing economic and regional interdependence -Pro-business and family friendly environment -lowest tax-rate -Higher quality of life, education, -CECA -no discrimination against any citizens

-ensure representation of minority ethnic groups in parliament -Position in economic terms shown considerable improvements -Significant presence in legal and medical progressions-India to Burma -Burmese government spearheaded nationalization policies shattered Indian’s economy -ideological congruence between two nation -ethnic minorities, second class citizens-Indian in Malaysia -Malay and Islam would be the state religion -Share of Indian in skilled jobs decreased, blue collar work increased -bureaucracy dominated by Malays -2/3 of Indians caught in doldrums of poverty

Impact on Singapore-Increased ration in population figures, though still a minority-effective workers, hard labor builders of SingaporeNew diaspora -skilled and talented, competitive and ambitious -mostly professionals and successful entrepreneurs -higher income group of India- Prominence of Indians in finance, ICT, R&D sectors-Indian Business Schools(S.P. Jain center of Global Management and Technology institutes more accessible to Singapore-“India fever” increased tourism flow-Indian culture, films, food, festivals

Impact on India-Openness of regulation,-India’s foreign policy initiatives, transnational motilities and increasing prominence of successful Indians have reversed the cultural disconnect with its diaspora-MOIA ( ministry of Overseas Indian affairs) set up-aim at higher involvement of Diaspora in the economic development of the country-Substantial income from remittances-Investments and collaborations(education, economic) boost bilateral relations-complement India-ASEAN relations and Indian’s foreign policy directives towards ASEAN-backlash

Challenges-continuous mobility leads to lack of stability (backlash)-Hard to control migration of Indians to Singapore-Apprehensions on the issues of ‘foreign talents’-new and old divide, characteristic of new and old diaspora-sustainability of the present trend-shrinking opportunities for mobility may lead to different trajectories

Go East Policy

India and Southeast Asia linkages-Historically maritime India had extensive strategic, cultural, religious, linguistic trade link with ASEAN-India has Extensive and established presence in the vast geographical region that lies to the east of India covering not only ASEAN but also China, Korea and Japan-Colonial complexities-indentured labor, China trade-destroyed pre-colonial arrangements and understanding-Nehru took in the formulation of the Foreign policy for a newly-independent India, he placed emphases on Asian unity with the intent, placing China and Japan center of global politics

India and Southeast Asia : Pre-1991 Era relation-Rajiv Gandhi – remained basically a closed economy-India’s trade policy followed largely the traditional trends that acquired during colonial period-Nehruvian period- did not factor in trade as engine of growth-During Cold war, India favor USSR and the Eastern Bloc states-little room within policy framework to make it easier for any of the export led economics to look on the Indian market as attractive destination-Growth remained restricted and gradually the imbalance between demand and supply for good and services resulted in India facing dramatic shortfall in currency reserves-During Rajiv Ghandi – ‘Bumiputra’ issues-Turned down the invitation extended in 1980 to attend ASEAN summit meeting in KL-Both Nehru and Indira Gandi failed to apprecriate the good will that he and his country had for India(relation with Malaysia)-Narasimha Rao point out considerable gaps in mutual understanding between India and Southeast Asian Countries(commonwealth summit in KL 1989)-essential that India provide greater political and economic content to our relations with the country of the region to create a vested interested link to economic factor

Post 1991 facts-ASEAN formed in 1967-End of Cold War – USA sole superpower and defining element in emerging power equations-Failure of UN to bring desired peace and stability-Indian involvement in different issues in Sri Lank and Maldives signaled her moving towards the acquisition of a blue water naval capability-1992 sector of Dialogue partner-1996Full dialogue Partner to ASEAN-common border due to Myanmar inclusion into ASEAN in1997

Genesis of the ‘Look East’ Policy-Initiated during Rajiv Gandhi period to establish more economic and strategic relationship with SE Asian nation states-recognize the benefits to its future that the holy grail of globalization and the advantages of a market driven economy could provide

-establish more positive economic and strategic relationship with Burma(attempt)-take serious account of China’s growing presence in SE Asian through “constructive engagement”-‘Look East Policy’ announced by PM Narasimha Rao in Singapore with LKY-China presence establishing a maritime capability that would fulfil her ambitions of a two ocean presence-Manamoham Singh on LEP – “a strategic shift in India’s Vision of the world and India’s place in the evolving global economy”

Key Aspect of Look East Policy-Finding lasting solution that would ensure and end to the troubled North East. Land connectivity between that part of Indian within it alienated group, receiving support from the PRC and Pakistan-India’s approach was to deal with the China factor not only bilaterally but also in a regional context involving closer relationship with ASEAN and the Far East(economic and security)(-Lead within ASEAN on India was taken by Singapore, India and Singapore high degree of comfort, saw proposal from Goh Chok Tong for closer economic relationship as positive indicator to changed relationship-Providing with greater strategic depth, the factor of defense cooperation with Singapore and to an extent with Malaysia(China and USA as challengers)-better defined relationship with japan, greater investment and business flows between two countries, japan also play a role in containing china’s two ocean naval ambitions and India have a role-Russia, Taiwan establish relationship-Thailand to develop a separate regional system leading to BIMSTEC

India and ASEAN: Common Interest-Common economic interested-free markets and in the freer flow of direct foreign investment-free international flow of goods, services, capital and information-Striving for competitiveness-gird themselves for the rigors of the international competition that is so vital for the health of the global economy and of individual economies-Beyond trade and investment, recent financial crisis has forcefully brought ASEAN government the necessity of cooperating closely-Areas for cooperation and dialogue-two way learning, mutual understanding(establish link s with India and ASEAN Free Trade Area)(IT obvious area of ASEAN-India cooperation)-cooperating in Human development- India and most ASEAN countries face the same problem of human development-Vibrant economies, Bilateral investment-increasing prominent private sector and entrepreneurs-Natural resources and agriculture

India-ASEAN relations facts-Combined population of 1.8billion and GDP of almost 3 trillion-Signed FTA in goods in 2009-FTA in services in 2012

-India and ASEAN trade from $40 billion in 2009 to $80Billion in 2011-12-ASEAN is India’s 4th largest trading partner-ASEAN markets – significant investment opportunities for India in areas of ICT, automobile, engineering and pharmaceuticals.-Prime areas of investment flows from ASEAN into Indian markets- energy, transport, logistic. $19 Billion worth of investments between 2000 and 2012.

ASEAN-India Relation-Transport and infrastructure connectivity emphasize- India-Myanmar-Thailand trilateral- highway already in progress opening new land route via Northeast India into ASEAN-Various scholarship offered by India to ASEAN – training 320 ASEAN citizens in IT and space-ASEAN-India Green fund set up in 2007 to address climate change and cooperation in renewable energy-2012 car rally

India-ASEAN engagement: effects and trends-Acceleration of globalization in the 21th century led to a new vitality to the LEP-ASEAN keen on enhanced partnership with India (Thailand ambassador to India “we are now looking at India as a much more important partner than Europe” after Europe Crisis)-Signing and implementation of bilateral trade agreements has led to growing economic relationship. India-ASEAN relationship much more complementary than mere exchange of raw materials-LEP initiated primarily with economic interests, but ASEAN-India engagement went much beyond-no in territorial claims buy strong economic interests in South China sea-India’s growing engagement with Vietnam-Vietnam announced offered Indiaa 7 oil blocs in South China Sea, MOU on oil exploration-Apprehension of ASEAN countries about the movement of labor , crowding of India professionals in the Region-India-ASEAN commemorative Summit held in Delhi in December 2012, adopted Vision statement on ASEAN-India Ties

Indian point of view-ASEAN-India FTA – a comprehensive agreement in line with the other ASEAN plus ONE FTAs-Dr. Manmohan Singh, gave full support to ASEAN’s vision of economic community by 2015-Aims to have intensified consultation in the political and security arenas of AEAN, with the aim of evolving a transparent and inclusive regional architecture

Singapore’s role in ASEAN-India relation-encourage India to be constructive participant in ASEAN, regionally, culturally ,economic, trade-facilitates and encourage connectivity through road, rail and air link including cooperation in telecom, information and energy-PM Lee welcome India’s full participation in the Regional Comprehensive Economic Partnership (RCE{}, launched at Cambodia meet-Urged ASEAN and India to expand into new areas of Cooperation