India has told Singapore that allowing immediate free movement of skilled people and substantially higher investment in India?s capital markets are essential for the survival of the five-year old Comprehensive Economic Cooperation Agreement (CECA) with the island state.
India plans to wrap up the review of this flagship trade treaty within a year, far less than the time usually allotted for such talks to conclude. The short span is an indication of its unhappiness over the pace of the opening up of services and capital investment, despite five years of the operation of the agreement.
According to official sources, when Singapore trade minister Lim Hng Kiang visited India last week for talks with commerce minister Anand Sharma to review the progress of CECA, New Delhi stressed on ways to step up liberalisation in services. ?Trade between India and Singapore in merchandise goods has increased multi-fold. However, services still lag behind and that?s an area of concern,? said an official, on condition of anonymity. He said the synchronisation between professional institutes in India and their counterparts in Singapore has not happened so far, and India has taken serious note of this.
India is keen to position the CECA as an entry point to the lucrative Asean markets. Singapore allowing free movement of skilled Indian personnel is expected to be a force multiplier for India?s employment market.
So, the stakes for India are high in the run-up to CECAs with Asean and Japan. If Singapore agrees to the new terms of revision, it will be flagged by India at every negotiation.
The Indian government is also peeved at the fact that of the 1,780 foreign institutional investors registered with Sebi, very few are of Singapore origin. This is an asymmetry which the government feels can be rectified if the Singapore government leans on the investors to correct their Shanghai market bias. The CECA was designed to bring in financial sector investment to exploit opportunities as India liberalised the sector. But this too has not happened, said a commerce ministry official.
?If services liberalisation is fully achieved as we hope, then India will have a lot more to gain than Singapore. It (Singapore) is a developed economy. Why would a Singaporean doctor want to come to India at literally one-fourth the income? However, there would be many Indian doctors, architects, engineers and nurses wanting to go to that part of the world,? he said.
A senior trade official with an industry chamber said that there has been no progress between the two countries especially in mutual recognition agreements (MRA). ?Even after five years, MRA liberalisation has not been achieved?this is an area where India has much to gain,? he said. He added that some ?incremental progress? has been made in banking.
SK Mohanty, Fellow at Research Information Systems (RIS) who worked on the joint-study group on India-Singapore CECA said there has been no headway in MRA, and it is a cause for concern for India. ?When the feasibility study was conducted, we realised that India is not going to get enough from liberalisation in goods?it is in services where we hold a key which has made no progress,? he said.
Mohanty added that Singapore is reluctant to open its borders for Indians because it fears that it is going to result in an influx of Indian professionals. Mathew Linu Philip, executive director of Centre for Trade and Development (Centad), a Delhi-based think tank said that it is not in Singapore?s interest to allow Indian working professionals to enter the country because of its close proximity to China. ?Singapore imports mostly from China therefore, it does not make sense for them to liberalise services with India,? he said.
The CECA between India and Singapore was signed in August 2005. According to the agreement in services, the two countries agreed to allow free movement of IT professionals, chartered accountants, architects, engineers and doctors.
