India and Singapore recently discussed enhancing cooperation in semiconductors, industrial parks, skilling, digitalisation, and trade development. External Affairs Minister Dr. S. Jaishankar met with President Tharman Shanmugaratnam, marking a key moment in the 60th anniversary of bilateral relations. Dr. Jaishankar expressed confidence that the visit would strengthen the India-Singapore strategic partnership.

President Shanmugaratnam, accompanied by a high-level delegation, will meet with President Droupadi Murmu and Prime Minister Narendra Modi during his five-day visit. His visit also includes a trip to Odisha. This visit is expected to further bolster the longstanding ties between India and Singapore, built on trust, friendship, and mutual respect.

Historical Connection

The historical ties between India and Singapore date back to the early 19th century. Singapore, founded as a trading station by Sir Stamford Raffles in 1819, was governed by British colonial authorities from Kolkata, India. Following Singapore’s independence in 1965, India was one of the first countries to recognize Singapore, laying the foundation for strong diplomatic and economic ties. These historical roots continue to shape the bilateral relationship today.

Trade and Economic Cooperation

• Trade Relations: Singapore is India’s largest trade partner in the ASEAN region and the sixth-largest globally (2023-24). Bilateral trade between the two countries reached USD 35.6 billion in 2023-24, following the signing of the Comprehensive Economic Cooperation Agreement (CECA). India primarily imports electronics, machinery, and chemicals from Singapore, while exports include refined petroleum, gems, and textiles.
  
  
• Foreign Direct Investment (FDI): Singapore is a critical source of foreign direct investment for India. In FY 2023-24, Singapore invested USD 11.7 billion in India. However, concerns have been raised about "round-tripping" of investments due to Singapore’s status as a tax haven.
  
  
• Taxation Agreement: The Direct Tax Avoidance Agreement (DTAA) signed in 2016 helps curb tax evasion, enhancing transparency in economic transactions between the two countries.

Defence and Strategic Cooperation

• Defence Exercises: Both countries conduct regular joint military exercises, including Exercise Agni Warrior (Army), Exercise SIMBEX (Navy), and Joint Military Training (JMT) for the Air Force. These exercises enhance cooperation in maritime security, counterterrorism, and regional stability.
  
  
• Strategic Maritime Cooperation: Singapore’s location in the South China Sea and its role in the Indian Ocean Naval Symposium (IONS) make it an important security partner for India. The countries work together to enhance maritime security and extend their regional influence.
  
  
• Indo-Pacific Cooperation: Singapore’s support for the Indo-Pacific Economic Framework for Prosperity (IPEF) further strengthens the strategic alignment between the two nations in promoting peace and stability in the Indo-Pacific region.

Fintech and Digital Connectivity

• Digital Payments:One of the key highlights is the integration of the RuPay card and UPI-PayNow linkage, which facilitates seamless cross-border payments. This collaboration supports India’s vision of a digital economy and strengthens financial ties between the two nations.
  
  
• PM-WANI Scheme: Singapore’s expertise in digitalization has complemented India’s efforts in expanding internet connectivity, particularly through the PM-WANI scheme. The initiative aims to enhance internet access in rural areas, and Singapore’s experience in technology plays a crucial role in its successful implementation.

Multilateral Cooperation

• Membership in Multilateral Forums: India and Singapore are part of various international and regional platforms, including the East Asia Summit, Commonwealth, Indian Ocean Rim Association (IORA), and Indian Ocean Naval Symposium (IONS). These platforms promote collaboration on global security, economic growth, and sustainable development.
  
  
• International Solar Alliance and Global Bio-fuel Alliance: Both nations are active participants in global initiatives such as the International Solar Alliance and the Global Bio-fuel Alliance, focusing on renewable energy and sustainability.
  
  
• Support for IPEF: Both India and Singapore support the Indo-Pacific Economic Framework for Prosperity (IPEF), aiming to enhance regional economic cooperation and secure prosperity in the Indo-Pacific region.
  
  

Indian Community in Singapore

• Community Size and Influence: Ethnic Indians constitute approximately 9.1% of Singapore’s resident population, with many others among the 1.6 million foreign nationals. The Indian community plays an essential role in the economy, culture, and society of Singapore.
  
• Cultural Ties: Tamil, one of the four official languages of Singapore, reflects the deep cultural and historical ties between the two countries. The Indian diaspora also facilitates people-to-people exchanges, further cementing the bilateral relationship.
  
  

Challenges in India-Singapore Relations

1.   Overwhelming Chinese Presence: Singapore has significant investments in China, which accounts for nearly 85% of the total inbound investments from Belt and Road Initiative (BRI) countries. China is also Singapore’s third-largest trading partner. Balancing economic interests in China while maintaining a strong relationship with India remains a complex issue for Singapore.

2.   Singapore as a Tax Haven: Singapore's status as a tax haven has raised concerns in India, particularly regarding "round-tripping" of capital. While the Direct Tax Avoidance Agreement (DTAA) addresses some issues, concerns about tax evasion continue.

3.   Trade Barriers: India has raised issues regarding limited market access for its service exports and the challenges surrounding the mobility of professionals. The lack of adequate mobility for skilled workers remains a barrier to maximizing the potential of bilateral trade.

4.   Gold Smuggling and Anti-Indian Sentiments: Instances of gold smuggling have been reported, with Indian migrant workers often being exploited. Additionally, there have been instances of anti-India sentiments in Singapore, particularly in the workplace and on social media, which affects the Indian community.

Way Forward for India-Singapore Relations

1.   Review of CECA: The Third Review of CECA should be expedited to keep the trade agreement relevant and reflective of the evolving economic landscape. This review will help ensure that the agreement remains beneficial for both countries.

2.   ASEAN-India Trade Agreement (AITIGA): A review of the ASEAN-India Trade in Goods Agreement (AITIGA) is essential to simplify the trade processes and make the agreement more business-friendly. Concluding this review by 2025 will enhance trade facilitation.

3.   Urban Planning and Development: Collaborations between the Singapore Cooperation Enterprise (SCE) and Indian states in developing smart cities and improving urban infrastructure can support India’s urbanization goals, leveraging Singapore's expertise.

4.   Mitigating Anti-Indian Sentiments: The Indian Embassy in Singapore should set up a helpline or support system for Indian workers facing harassment or discrimination. This will help mitigate anti-Indian sentiments and protect the interests of the Indian community.

5.   Leveraging Services Trade: India should work with Singapore to liberalize the services sector, focusing on areas where it has a comparative advantage, such as information technology, healthcare, and education. This will help address trade imbalances and maximize economic potential.

Conclusion

India and Singapore share a deep and multifaceted relationship built on mutual respect, trust, and shared strategic interests. The bilateral ties have evolved over decades, with both countries cooperating in trade, defence, fintech, and multilateral forums. Despite challenges in areas such as trade access and geopolitical concerns, the potential for deeper collaboration remains immense. By addressing these issues and leveraging their strengths, India and Singapore can further enhance their partnership, contributing to regional and global peace, prosperity, and stability.