| Singapore Prime Minister Lee Hsien Loong with Prime Minister Manmohan Singh in New Delhi on Wednesday. (AFP)
New Delhi, June 29: India and Singapore today signed a landmark comprehensive economic co-operation agreement (CECA) to usher in a new era of open trade and investment between the two countries and a more liberal visa regime for professionals on both sides.
The pact, signed by Prime Minister Manmohan Singh and his Singapore counterpart Lee Hsien Loong, will take effect on August 1. Loong said the understanding and the mutual legal assistance treaty inked here today will take the “very good bilateral relations” between India and Singapore many “steps forward.” Trade aside, he gave India a shot in the arm by supporting Delhi’s bid for a seat in the UN Security Council.
Under the pact, Singapore will allow zero-duty entry to all India-made goods. Since the island nation is an international trading hub, this is expected to go a long way in developing supply chains outside India.
In return, India has agreed to eliminate tariffs on 506 items immediately. A second list for phased duty waiver and tariff cuts is being issued, along with 6,551 goods and services where no concessions have been offered.
A crucial component of the pact lies in provisions related to the movement of citizens between the two nations. Mutual recognition agreements will be signed over the next 12 months in architecture, accountancy and medicine. Around 120 professions are being recognised from India for fast-track visa approvals by Singapore.
Officials say the agreement is an integrated package that will allow three major Singapore banks ' DBS Holdings, Overseas Chinese Banking Corporation and United Overseas Bank ' to set up wholly-owned Indian subsidiaries. They will be treated on a par with Indian banks in setting up new branches, areas of business and prudential norms.
Indian banks already in Singapore ' State Bank of India, Bank of India, Indian Bank and Uco Bank ' will get full banking status. This will allow them to go in for electronic funds transfer, clearances and use of local ATMs.
The pact also includes a bilateral investment protection agreement, a double-taxation avoidance understanding with additional safeguards to avoid misuse by shell companies, besides an integration pact in services.
Singapore has pumped $1.5 billion into India’s telecom industry, making it the biggest investor from Asia and the third-largest on a global scale.