India-Singapore relations gained momentum post 1990s particularly after adoption of 'Look East Policy' in 1991 which was later renamed as 'Act East Policy'. With the adoption of it, importance was given in establishing relations with Southeast Asian regions. Singapore is India's fourth largest export market and the country's biggest trade partner among the ASEAN. Singapore is even one of the top five foreign investors in India. India too is the largest trading partner of Singapore in South Asia
The economic relations can be understood with the signing of the Comprehensive Economic
Cooperation Agreement (CECA) on 29th June 2005. It focuses on bilateral collaboration in
education, science, technology, aviation to name a few. It is the first Agreement by Singapore with any developing country. However due to Covid Pandemic, a lot of hype has been created over the media that CECA allows more privileges to Indian nationals to migrate to Singapore for work which in turn creates a lot of competition for Singaporeans as well.
Though the Singaporean government dismissed such fake rumors and had clearly stated that neither CECA or any FTA give special privileges to Indian nationals. Any professional coming to work in Singapore has to fulfill the essential criteria to work in Singapore. India has also signed the Double Taxation Avoidance Agreement (1994; Protocols signed in 2011). It ensures the double taxes are avoided; offers access to a preferential tax regime. With 8,000 Indian companies being registered in the city, it makes India the largest foreign corporate contingent. "Singapore is considered as a good base for Indian companies to work from in order to expand to Southeast Asia and beyond".
But economic relations to an extent have deteriorated for instance- The Andhra Pradesh's capital city project has been cancelled. This project was agreed by Andhra Pradesh government and Singapore consortium in 2017 to develop Amaravati capital city start-up area. The repercussions is that the consortium lost a few million dollars. However, with China expanding its power, it is trying to establish economic relations with India and Singapore as well in order to gain a strong position in the region. When comparing economic relations between Singapore and China, China does share a robust relationship with Singapore accounting for nearly 85% of total inbound investments. But in comparison to India, Singapore's economic relations with China are mostly rooted under BRI rather than comprehensive national cooperation.
Singapore has always considered China as beneficial area of investment due to:-
● Shared good intergovernmental relations
● China provided preferential tax breaks, priority access to scarce resources, favorable
financial terms
● Socio-political system remains stable.
In contrast, India does not have a stable political system and frequent changes in policies makes it difficult for investors to invest. What is required on the part of India is to work on various areas in order to improve the economic relations with Singapore and other like-minded countries keen on investing in India, particularly in developing infrastructure and technology, introducing a conducive tax regime and reducing Red-tapism/efficient bureaucracy.
Development in these areas would also provide access to markets in Philippines, Malaysia,
Indonesia and other Southeast Asian regions. Along with it, what is also required on part of India is to reduce reliance on Chinese imports. In order to ensure this India needs to enhance its infrastructure and boost its imports from ASEAN.