New opportunities for S’pore businesses in India

Sectors cited include food processing, education and urban solutions
By MALMINDERJIT SINGH

“SINGAPORE’S FDI inflows into India should get higher priority,” said Indian High Commissioner to Singapore T C A Raghavan in his address at a seminar on the Indian budget here yesterday.
Dr Raghavan’s comment was echoed throughout the seminar as speakers highlighted how measures introduced in the Indian budget, announced on Friday, open up opportunities for Singapore companies to invest in India.
These measures include significant changes to the investment framework such as simplifying the foreign direct investment (FDI) regime, clearly defining the methodology for calculating indirect foreign investment in Indian companies, and the complete liberalisation of pricing and payment of technology transfer fee and trademark, brand name and royalty payments.
One of the speakers, Indraneel Choudhary, who is an executive director at PricewaterhouseCoopers (PwC) India, said: “In terms of the relaxation on the royalty and technical services, there are now no more caps for incomes earned by Singapore companies who have invested in or have technology or intellectual property in Singapore that they have now passed on to Indian companies and so this is a major move by the government to stimulate greater technology-based FDI, including from Singapore.”
Besides this, the Indian government also announced plans to sell its stakes in 60 state-owned firms to raise around US$8.6 billion.
The budget also included more licences being offered to private sector players in banking and allowing greater private sector investment in the retail and storage of agricultural products.
According to speakers at the seminar, all of these measures will help to create more opportunities for overseas companies, including those based in Singapore.
“More Singapore companies can get involved in food storage and processing and I also see increasing opportunities for local businesses in sectors such as education and urban solutions,” said Vijay Iyengar, chairman of the Singapore Indian Chamber of Commerce and Industry (SICCI).
Amitendu Palit, visiting research fellow at the Institute of South Asian Studies, pointed out that long-term sentiment for foreign investment growth into India is buoyant and this would help attract Singapore companies there.
“There has been positive growth in foreign direct investment and indirect investment into India in the first nine months of this financial year and this shows that investors around the world still find the Indian market very attractive. There are reasons and opportunities for Singapore companies to also do the same,” said Dr Palit.
Pramod Bhatia, executive director with PwC India, noted that Mauritius is the largest source of foreign direct investment into India at present, accounting for as much as 44 per cent of India’s total FDI inflows, while Singapore, which is ranked second, accounts for only 9 per cent. He attributed the distortion to more FDI flows coming via Mauritius.
Dr Palit added: “The Singapore-India trade story is more than the statistics show, especially since there is a lack of data in trade in services. Therefore, I would like to think that the economic relationship between both countries also needs to be evaluated qualitatively.”
The seminar was jointly organised by the SICCI, the Institute of South Asian Studies (ISAS), the Federation of Indian Chambers of Commerce and Industry (FICCI) and PwC.