India-Singapore Comprehensive Economic Cooperation Agreement



The landmark India-Singapore Comprehensive Economic Cooperation Agreement (CECA) is India’s first-ever such agreement and the first between Singapore and a South Asian country. It came into effect on 1 August 2005. The first review of the pact was concluded on 1 October 2007, while the second review has been ongoing since 11 May 2010.

Background
During a business forum at the Shangri-La Hotel in Singapore on 8 April 2002, then Prime Minister Goh Chok Tong and his Indian counterpart, Atal Bihari Vajpayee, announced the decision to establish a group to study the potential benefits for closer economic ties between the two countries, and to launch a comprehensive economic partnership agreement within one year. Goh reasoned that this would create a strong base for Indian companies in the ASEAN (Association for Southeast Asian Nations) region and, at the same time, boost the confidence of Singapore companies interested in investing in India.1

At the time, India was one of the fastest-growing economies in the world and had a potential market of over 360 million middle-class consumers. For India, on the other hand, Singapore was a gateway to the ASEAN market and East Asia, particularly China.2 India also had an abundance of skilled manpower, while Singapore possessed good infrastructure and processes.3


Study and negotiation
A 10-member India-Singapore Joint Study Group was formed to study the scope and structure of the CECA. They focused on the liberalisation of trade in goods, services and investments, and areas related to international trade. The study also examined cooperation in fields such as life sciences, information and communications technology, tourism, and research and development. The study group was co-led by Rakesh Mohan, adviser to the Indian finance minister, and Lim Chin Beng, a member of Singapore’s Public Service Commission.4 Team members included representatives from the countries’ ministries of foreign affairs, commerce and finance, and representatives from the business and industry sectors.5


The resultant report was accepted as the framework for the CECA talks on 8 April 2003, when Singapore’s Trade and Industry Minister George Yeo and India’s Commerce and Industry Minister Arun Jaitley signed the agreement.6 Singapore fielded a 30-member negotiation team led by Heng Swee Keat, the permanent secretary for trade and industry, while India’s delegation was headed by Secretary of Commerce Dipak Chatterjee.7 After 13 rounds of negotiation held in India and Singapore,8 the agreement was signed on 29 June 2005.9 Taking effect on 1 August 2005,10 the CECA became India’s first-ever comprehensive economic pact and the first between Singapore and a South Asian country.11

Description
Some of the key features of the CECA were:

Enhancement to avoidance of double taxation agreement
This was an improvement from the previous double taxation agreement signed in January 1994, which allowed investors to enjoy capital gains tax exemption on investments in India, and encouraged the flow of trade investments, technical know-how and expertise between the two countries by eliminating the double taxation of income.12

Trade in goods
Approximately 75 percent of tariffs on Singapore’s domestic exports of electrical and electronics, instrumentation, pharmaceuticals and plastics to India were removed or substantially reduced within five years, and Singapore granted zero-tariff treatment on all imports from India.13

Mutual recognition agreements
Such agreements eliminate duplicate testing and certification of products, thereby reducing costs and shortening the time taken to facilitate entry of goods for sale to both countries. Singapore and India also committed to negotiate for mutual recognition agreements in accounting and auditing, architecture, medicine, dentistry and nursing.14

Trade in services
The service suppliers in India and Singapore were guaranteed access into each other’s markets. For financial services, three Singapore banks – DBS Group, OCBC Bank and United Overseas Bank – would be treated equally with Indian banks, and enjoy greater freedom to open branches.15

Movement of citizens
Singapore and Indian citizens and permanent residents were guaranteed entry and allowed to stay in each other’s country as business visitors, short-term service suppliers, professionals and intra-corporate transferees.16


Education
A key mandate of the CECA was the facilitation of joint postgraduate programmes between the Indian Institutes of Technology and the Institute of Science with Singapore universities.17

Media
The CECA created a platform for greater media industry and private-sector collaboration between the two countries.18

Developments
The total trade between India and Singapore in 2003 was about S$5.9 billion; with the CECA, this figure saw a quadruple increase to S$24.6 billion in 2014.19


The first review of the agreement was concluded on 1 October 2007,20 and the amended agreement took effect on 15 January 2008. Henceforth, more than 500 additional domestic exports to India enjoyed reduced or no tariffs, bumping up the coverage of domestic exports with tariff concessions to 82 percent.21 A new mutual recognition agreement was established for imports of Indian medicinal products.22 Facilitation of movement of professionals, expanding market access to financial services and furthering intellectual property rights cooperation were also addressed during the review.23

By 2008, Singapore companies in the areas of real estate, hotels, service apartments and information technology parks had established themselves in India, while banks like DBS and the United Overseas Bank were still trying to break into the Indian market.24 Over 3,000 Indian companies had also set up offices in Singapore. These pertained to industries like information technology, education, logistics and manufacturing.25

The second review of the CECA began on 11 May 2010, targeting the expansion of trade, services and investment relationship, and ensuring that Singapore would receive similar advantages that India might have conceded in a similar accord with South Korea.26 As at January 2018, Singapore is still working with India to conclude the second CECA review.27



Author
Ang Seow Leng



References
1. Khanna, V. (2002, April 9). PM Goh, Vajpayee root for stronger S’pore-India ties. The Business Times, p. 2. Retrieved from NewspaperSG.
2. Sen, A. (2003, May 12). S’pore-India economic ties set to take off with trade pact. The Business Times, p. 1. Retrieved from NewspaperSG.
3. S’pore, India complete round 6 of talks. (2003, December 1). The Business Times, p. 11. Retrieved from NewspaperSG.
4. India-S’pore panel to study closer ties. (2002, May 15). The Business Times, p. 9. Retrieved from NewspaperSG.
5. Aggarwal, N. (2002, May 15). India, S’pore form panel to study trade deal. The Straits Times, p. 15. Retrieved from NewspaperSG.
6. Chuang, P. M. (2003, April 9). India-S’pore trade talks keenly watched: PM Goh. The Business Times, p. 8. Retrieved from NewspaperSG.
7. Choudhury, A. R. (2003, May 30). Singapore, India discuss economic alliance in 3 areas. The Business Times, p. 14. Retrieved from NewspaperSG.
8. Uberoi, N. K., et al. (2005). Guide to India-Singapore Comprehensive Economic Cooperation Agreement. Singapore: Rajah & Tann, p. 2. (Call no.: RSING 382.5405957 GUI)
9. Ministry of Trade and Industry, Singapore. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/
10. Das, S. B., & Sen, R. (2006). India-Singapore CECA: Rationale, overview and implications. In Uberoi, N. K., et al. (Eds.), Guide to India-Singapore Comprehensive Economic Cooperation Agreement (pp. 24–42). Singapore: LexisNexis, p. 25. (Call no.: RSING 382.5405957 GUI)
11. Ministry of Trade and Industry, Singapore. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/
12. Ministry of Trade and Industry. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/

13. Ministry of Trade and Industry. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/

14. Singh, H. and Pinsler, L. (2006, August 17). Reviewing the India-S’pore CECA. The Business Times, p. 23. Retrieved from NewspaperSG.
15. Aggarwal, Y. (2005, June 28). Ceca a winning deal for both S’pore, India. The Busines Times, p. 23. Retrieved from NewspaperSG.
16. Ministry of Trade and Industry. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/
17. Ministry of Trade and Industry. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/

18. Ministry of Trade and Industry. (2005, June 29). Signing of the India-Singapore Comprehensive Economic Cooperation Agreement [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/

19. Ministry of Finance. (2015). Speech by Mr Heng Swee Keat, Minister for Finance, at the 10th International Conference on South Asia. Retrieved from the Ministry of Finance website: http://www.mof.gov.sg/news-reader/articleid/1544/parentid/59/year/2015?category=Speech
20. S’pore, India sign protocol to cut tariffs. (2007, December 22). The Business Times, p. 6. Retrieved from NewspaperSG.
21. Privileges of free trade agreement. (2008, June 19). The Business Times, p. 10. Retrieved from NewspaperSG.
22. Lee, S. S. (2007, October 2). More S’pore exports to India will enjoy tariff concessions. The Straits Times, p. 45. Retrieved from NewspaperSG.
23. High Commission of India, Singapore. (2017). CECA, 2005. Retrieved 2017, November 15, from High Commission of India, Singapore website: https://www.hcisingapore.gov.in/pages.php?id=75
24. Chuang, P. M. (2008, January 24). Revised India CECA takes effect. The Business Times, p. 10. Retrieved from NewspaperSG.
25. Lee, U.-W. (2008, April 5). S’pore’s ties with India go up another notch. The Business Times, p. 2. Retrieved from NewspaperSG.
26. Velloor, R. (2010, May 12). S’pore, India set to drum up trade. The Straits Times, p. 29. Retrieved from NewspaperSG.
27. Singapore remains committed to concluding review of India trade pact: MTI. (2017, April 5). Channel NewsAsia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg



The information in this article is valid as at 3 January 2018 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Subject
Commerce and Industry>>Trade
Politics and Government
Economy