SIGNING OF THE INDIA-SINGAPORE COMPREHENSIVE ECONOMIC COOPERATION AGREEMENT
Indian Prime Minister Manmohan Singh and Prime Minister Lee Hsien Loong today signed the India-Singapore Comprehensive Economic Cooperation Agreement (CECA). This landmark agreement is
The CECA was successfully concluded after 13 formal rounds of negotiation, and encompasses trade in goods, trade in services, investment protections and other features. The CECA covers Mutual Recognition Agreements that will eliminate duplicative testing and certification of products in specific sectors, as well as cooperation chapters that will encourage and facilitate bilateral cooperation in several sectors. The CECA has also encompassed a review to the existing Avoidance of Double Taxation Agreement between
The Agreement is a strategic compact between the two countries that will further enhance bilateral ties by catalysing the already growing flows of trade, investment, ideas and people.
MINISTRY OF TRADE AND
COMPREHENSIVE ECONOMIC COOPERATION AGREEMENT (CECA)
Comprehensive Economic Cooperation Agreement
Negotiations for the
The Declaration of Intent followed the completion of the Joint Study Group Report on the CECA. This report was presented to both then Prime Minister Goh and then Prime Minister Vajpayee before the signing of the Declaration. In the Declaration, the Ministers agreed that the Joint Study Group Report on the CECA would serve as a framework for subsequent negotiations.
The ambitious and comprehensive nature of this endeavour was reflected in the multi-faceted and well-represented inter-ministry teams from both sides.
After 13 formal rounds of negotiations,
This landmark agreement is
The India-Singapore CECA is scheduled to be signed on
Key Features of CECA
Improved Avoidance of Double Taxation Agreement
An Avoidance of Double Taxation Agreement ("DTA") provides for avoidance of double taxation of income earned in one
For the purposes of the capital gains tax exemption, a company is not a shell company if:
� It is listed on recognised stock exchanges of the
� Its total annual expenditure on operations in the
The capital gains tax exemption regime of a country is an important consideration for investors and this exemption, which was previously only available to
Trade in Goods
The Trade in Goods Chapter provides for tariff concessions that will make
For Singaporean goods entering
Timeline for the Phased Tariff Concessions
Tariff reduction by date CECA enters into force (1.8.2005)
Tariff reduction by
Tariff reduction by
Tariff reduction by 1.4.2008
Tariff reduction by
Goods qualifying for Phased Tariff Elimination
Goods qualifying for Phased Tariff Reduction
To illustrate phased tariff concessions, we can use an Indian HS tariff line as an example. If the tariff line has an MFN rate of 10% in May 2009, a 50% reduction under Phased Tariff Reduction means that an import duty of 5% would be imposed on the Singapore-originating good entering
For Indian goods entering
Rules of Origin
Rules of Origin (ROO) identify the �nationality� of a good. They ensure that only Singaporean or Indian goods enjoy the tariff concessions under CECA.
The general rule of origin is a combination of 40% local content and a change in tariff classification at the 4-digit level. CECA also takes into consideration the unique production pattern of
Good customs procedures are necessary to ensure the free movement of goods traded between both countries. The lack of such procedures can increase compliance costs and diminish the benefits that result from tariff reduction.
Under CECA, the customs authorities from
� Provide an advance ruling on the eligibility of originating goods for preferential tariffs and tariff classification, upon the request of the trader. This will provide traders with greater certainty on the status of their goods at the country of import.
� Enhance the application of risk management to focus on high-risk goods and facilitate the clearance of low risk consignments. Both authorities will also enhance transparency in regulations so that traders would be fully aware of the requirements and procedures in the respective countries.
Standards and Technical Regulations, Sanitary and Phytosanitary Measures
CECA provides a framework for concluding Mutual Recognition Agreements (MRAs) to eliminate duplicative testing and certification of products to facilitate entry of goods for sale in the respective markets. These sectoral MRAs serve to reduce costs and shorten time to market especially useful for products with short life cycle.
Two sectoral annexes for trade in electrical and electronic products, and telecommunication equipment were concluded under the framework chapter. For products in these two sectors, testing and certification to Indian standards and technical regulations can be done at source. They do not have to be further tested or re-certified on arrival in the market.
The potential benefits are reduction in cost due to elimination of duplicative testing and reduction in time to market for these products to enter the Indian or
Of immediate benefit is the food sectoral annex where
The investment chapter aims to promote and protect investments from both countries. Market access for investments is based on the principle of National Treatment subject to the commitments or reservations undertaken. The chapter contains a number of useful features to protect investments. The key features are highlighted as follows:-
� Beneficiaries: Citizens and Enterprises based in
� National Treatment: The chapter accords National Treatment to investors from both countries. The market access feature of this provision is subject to the commitments and reservations undertaken.
� Expropriation and Compensation: 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.
� Investor to State dispute settlement: To give investors greater confidence in investing in either country, both countries have committed to allowing investors, once the investment is established, to take a dispute relating to an obligation under the chapter to an international arbitration tribunal.
�  , ; Free Transfers: Both countries will allow the investors to freely transfer funds related to their investments, such as capital, profits, dividends and royalties.
� Real Estate:
� Others: The Indian government has formally recognised Temasek and GIC as distinct entities. They are allowed to each own up to 10% of a listed Indian company, similar to other Foreign Institutional Investors (FII), as stipulated under current Securities and Exchange Board of India (SEBI) regulations.
Trade in Services
Generally, the benefits of the CECA will extend to the citizens, permanent residents, local companies as well as foreign MNCs that are constituted or otherwise organised in
Both countries have committed to liberalise various services sectors beyond its WTO commitments.
The sectors which
� For Financial Services,
� For asset management, 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). These instruments offered by our asset managers are free from the restriction that they must only invest in entities which have a stake in Indian companies.
� Indian banks and financial institutions can take advantage of CECA to expand their activities in
� For Telecommunication Services,
Both countries will review and enhance further air services linkages through the bilateral Air Services Agreement, in future.
Movement of Natural Persons
The cross-border movement of natural persons plays a central role in initiating and supporting trade and investments in goods and services. This chapter enhances trade and investment flows by facilitating easier temporary entry for 4 categories of business persons from
� Business Visitors who are holders of 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 to service their contracts 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 organisations) will be permitted to stay and work in
The Movement of Natural Persons chapter does not apply to measures regarding citizenship, residence or employment on a permanent basis. It also does not apply to immigration measures as long as these immigration measures do not nullify or impair the commitments made by either country.
The chapter will grant Singaporean and Indian Citizens and Permanent Residents guaranteed entry and stay in each other�s country as business visitors, short-term service suppliers, professionals and intra-corporate transferees.
With freer movement of business persons between countries, bilateral trade and investment flows should be significantly enhanced. Hence, companies from both countries can leverage on the chapter to drive greater economic integration between
The Agreement also prohibits any imposition of customs duties on digital products delivered electronically. In addition, both sides commit to ensuring transparency by making publicly available all relevant laws and regulations affecting electronic commerce.
The Chapter on Intellectual Property (IP) Cooperation is focused on collaboration and cooperation between the Parties.
The Parties agreed to undertake and promote mutually beneficial cooperation in the fields of IP and Plant Variety Rights. These forms of cooperation could include the joint organisation of training programs, and collaboration on projects to promote the effective use and application of IP. The Parties have specifically identified their leading training centres: the IP Academy, Singapore, and the Intellectual Property Training Institute (
The provisions on cooperation and collaboration in IP and training arrived at under the Chapter paves the way forward for collaboration between the Parties in the development of key IP programmes and IP infrastructure.
Science & Technology
The Science and Technology cooperation chapter will allow for the fostering of closer collaboration in research and development and commercialisation of technologies between the scientific and research communities from the two countries. It expands an earlier agreement on science and technology signed in 1995.
The agreement is geared towards harnessing the complementary capabilities available in the two countries. The areas of focus that have been identified for possible cooperation are marine and agricultural biotechnology, space research, advance materials and information technology.
The education cooperation chapter is aimed at combining the strengths of the education system in
One of its key mandates is to facilitate joint post-graduate programs between the world-renowned Indian Institutes of Technology (IIT) and
The chapter also provides that degrees specified by the University Grants Commission of India or an Institution of National Importance of India, and by universities in
A Joint Committee on Education will be established to emphasise the key role that education will play in fostering the relationship between the two countries. Its members will be drawn not only from government but from the private sector as well.
The media cooperation chapter offers a platform for the regulatory agencies from both sides to work closely together. This will allow focus not only on regulatory issues of mutual concern, but more importantly on promoting greater industry and private sector collaboration. Some of the areas of collaboration that could be looked into are digital media and convergent services, intellectual property rights, education and training, co-production of film and television content, distribution and marketing, and research and development.
In any international agreement, whilst we do not expect nor hope for disputes between the Parties as to what the agreement means, it would nevertheless be prudent to prepare for such an eventuality. In this connection,
The Ministers of
Ms Madeline Pereira
Senior Assistant Director
DID: +65 6332 7223
 The Joint Study Group (JSG) was formed after then Prime Minister Goh and then Prime Minister Vajpayee met in
 Estimated trade coverage is based on 2003 figures from International Enterprise