Singapore – India – Understanding CECA , explain Singapore Company Incorporation Specialists

Sept. 3, 2009 - PRLog -- The CECA with Singapore was India’s first comprehensive agreement with a trade partner. The bilateral merchandise trade has seen a near five-fold increase in the three years post-CECA from about $3.6 billion in 2005 to $19.11 billion in 2008, thus India became Singapore's 11th largest trading partner in 2008 and government of India statistics for 2008 showed that Singapore was the second largest investor in India with an FDI inflow of US$3.45 billion.

Synopses of the important elements pertaining to trade of goods and services, investments and movement of natural persons have been discussed below.

The merchandise traders based in both the countries have immensely benefited from the CECA. In the Free Trade Agreement part of the CECA, all Indian-made products, with the exception of cars and tobacco products, are allowed duty-free entry into Singapore.

Singapore based exporters will enjoy tariff elimination or reduction in 75% of Singapore's domestic exports. An additional list of tariff concessions was released in January 2008.

Recently in June meeting its other commitment under the CECA, India has reduced tariffs on 2,413 items. These can now be imported into India at tariff equivalent to 50 per cent of the most favored nation (MFN) applied rate. As for the 539 additional items, mostly manufactured products, on which India had taken newer tariff liberalization commitments in December 2007, the Finance Ministry has now taken the next step by slashing import tariffs in phased equal cuts for groups of products until 2015.

The general rule of origin for goods traded from Singapore is a combination of criteria - of the FOB value of the product at least 40% is accounted by local content and a change in tariff classification at the 4 digit level or satisfies product specific rules. CECA provides for a list of products which are exempt from the general rule.

Mutual Recognition Agreements (MRAs) are also being concluded to eliminate duplicative testing and certification of products in specific sectors, and facilitate bilateral cooperation in several sectors. These sectoral MRAs serve to reduce costs and shorten time to market. This is especially useful for products with short life cycle. Electronic and electrical and Telecommunication MRAs have already been concluded. Food Sector MRA covering egg products, dairy products and packaged drinking water from India, will immensely benefit the Indian suppliers while Singapore also benefits from an extended supply source for these products.

As regards services professional bodies of both the countries are discussing Mutual Recognition Agreement in the professions of accounting and auditing, architecture, doctors, dental and nursing. Both countries agree to provide a national treatment for service operators who will be given a level playing field in the sectors committed. For asset management services, Singapore owned or controlled fund managers have the additional privilege of offering Indian investors mutual funds and collective investment schemes (CIS) listed on the Singapore Exchange (SGX) as well as exchange traded funds (ETF). India has similarly lifted this limitation for India owned or controlled fund managers.

In the case of investment Singapore investors are not required to seek foreign investment approval for the sectors that India has committed. National Treatment is accorded to investors from both countries subject to the commitments (India) and reservations (Singapore) undertaken. Both countries will allow the investors to freely transfer funds related to their investments, such as capital, profits, dividends and royalties.

The CECA chapter on investments accords National Treatment to investors from both countries. The market access feature of this provision is subject to the commitments and reservations undertaken. Both countries cannot expropriate investments, directly or indirectly, without proper legal safeguards. Expropriation must be premised on public purpose and compensation based on market value. Land expropriation will be governed by the domestic legislation of each country. In order to assure protection for investments once the investment is established, disputes can be taken to an international arbitration tribunal. Both countries allow the investors to freely transfer funds related to their investments, such as capital, profits, dividends and royalties. Capital gains tax exemption is a significant aspect of CECA, which fortifies the Avoidance of Double Taxation Agreement concluded between the two countries. The exemption is valid for companies listed in Singapore or India and companies with annual expense of at least S$200000 or INR 5 Million in the 24 months preceding the date from which such capital gains arise.


The cross-border movement of natural persons plays a central role in initiating and supporting trade and investments in goods and services. This CECA facilitates easier temporary entry for 4 categories of businesspersons from India and Singapore. Business visitors with five year multiple journey visa will be permitted to enter and engage in business activities for a period of up to 2 months, which upon request, may be further extended by up to 1 month. Short-term service suppliers will be granted temporary entry for an initial period of up to 90 days in the first instance.  Professionals employed in 127 specific occupations will be allowed entry and stay for up to 1 year or the duration of contract, whichever is less. Intra-corporate transferees (i.e. managers, executives and specialists within organizations) will be permitted to stay and work in India and Singapore for an initial period of up to 2 years or the period of the contract, whichever is less. The period of stay may be extended for period of up to 3 years at a time for a total term not exceeding 8 years.

Thus CECA acts as a catalyst for accelerating bilateral trade, investment and economic co-operation and improves connectivity between India and Singapore not only for flow of merchandise and investment, but for the movement of professionals, talent and ideas as well.


Ms. Ragini Dhanvantray CEO of Rikvin Consultancy says “This is the finest example of how the countries and their businesses can stand to benefit from regional economic cooperation. CECA has catalyzed the economic benefits for both the trading partners and the impending relaxations will further boost the trading activities. For more information on how you can set your company in Singapore and benefits the CECA  Tax agreement, visit : http://www.rikvin.com

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