India-Singapore conclude review of CECA

New Delhi, Apr 2: The Ministerial Review Meeting of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has concluded in Singapore with both sides committing to resolve outstanding issues and a roadmap for the smooth implementation of CECA in its second year.

The review was jointly conducted by Union Commerce and Industry Minister Kamal Nath and his Singaporean counterpart Mr Lim Hng Kiang on Friday night, an official release said here today.

On Mutual Recognition Agreements (MRAs) on Goods, both sides agreed to complete negotiations before July 31, before the first anniversary of the CECA, which came into effect from August 1, 2005.

The issues of MRAs from the Indian side relate to pending issues such as minimum requirement for generic medicinal products from India; clearances for export of egg products; Qualified Full Backing (QFB) status to the State Bank of India (SBI) and customs cooperation issues.

The review also focussed on the issue of low investment by Singapore in India.

The Singapore side stated that one of the principal reasons for low investment in India was the rigid condition in the Double Taxation Avoidance Agreement (DTAA) with Singapore as compared to the Mauritius DTAA, especially the condition of annual expenditure of Singapore dollars 200,000 in each of the previous two years which restricted investment by both existing and new investors.

While it was pointed out that this condition was meant to address the issue of shell companies, both sides agreed to look into the possibility of exploring out of the box solutions to the problem such as treating special purpose vehicles (SPVs) whose holding company fulfilled the above criteria to qualify for advantages under the DTAA.

Total FDI investment from Singapore is around 300 million dollars up from 62 million dollars in 2004, which is still insignificant compared to the potential.

Mr Kamal Nath urged Singapore to accord high priority to FDI especially in infrastructure as well as in the Special Economic Zones (SEZs).

According to trade figures upto November 2005 and during the four months of the implementation of CECA, India's exports to Singapore have risen by over 40 per cent while imports from Singapore have also shown a growth of 11 per cent during the period.

CECA with Singapore is India's first with any country. It is an integrated package of several agreements including a free trade agreement in goods and services, investment, MRAs in goods on conformity assessment and professional qualifications and identified areas of economic cooperation.

Under the CECA, it was agreed that the implementation of this agreement shall be reviewed within 12 months of coming into force of CECA and thereafter review shall take place biennially. Since the operationalisation of this agreement 8 months ago, there are certain implementation issues faced by the two countries,which have been covered in the just concluded joint review.

During his visit, Mr Kamal Nath called on former Prime Minister of Singapore Lee Kuan Yew and also met Mr Lee Hsein Loong, Prime Minister of Singapore. he also had an interaction with 20 top investors and businessmen of Singapore and discussed FDI possibilities and how to significantly increase the trade flows, the release added.

UNI