Indian cabinet okays trade deal with Singapore

India's cabinet gave the go-ahead Monday for a landmark trade deal with Singapore that is expected to accelerate the flow of foreign direct investment into the South Asian nation. "This is India's first comprehensive economic co-operation agreement with any country and will provide numerous direct and fringe benefits," Indian Trade Minister Kamal Nath told a press conference.
The Comprehensive Economic Partnership Agreement encompasses accords on trade of goods and services, investment protection and avoidance of double taxation.
The cabinet clearance paves the way for Singapore Prime Minister Lee Hsien Loong to sign the accord on June 29 when he visits India.
"Singapore will offer all imports from India at zero duty which is expected to help us develop a supply chain to the huge markets of Asia as Singapore is a known trading hub." Nath said.
For its part, India will cut tariffs on imports from Singapore by 80 percent after the pact is signed, gradually reducing them to zero over a five-year period.
"By August 1, we will scrap customs duties on 506 items from Singapore, and then work towards a phased elimination and reduction of duties on over 4,000 items up to 2009," said Nath.
The agreement aims to ease barriers for Singaporean firms to invest in India's fast-growing economy and provide greater access for Indian professionals to Singapore's services industries.
"India and Singapore will ease visa regulations to make it easier for professionals from 127 fields to travel on work to each other's countries," said Nath. "The visas will be based on reciprocity," he added.
"We expect foreign institutional investments from Singapore to rise to five billion dollars with the implementation of this pact in the first year. Similarly, Singaporean foreign direct investment in India's infrastructure will top two billion" dollars, said Nath.
Singapore has invested 1.5 billion US dollars in India in sectors such as telecoms, making it the country's biggest Asian investor and the third largest foreign investor.
India expects Singapore to invest an additional two billion dollars in the technology, manufacturing, financial services and aviation sectors this year.
The agreement also calls for liberalisation of air transport between the two countries.
Singapore is forging free-trade or comprehensive economic agreements with key partners, while pushing for a global deal under the World Trade Organisation.