Singapore trade deal in Cabinet

The commerce department has sought the Cabinet's opinion on the framework for the proposed Comprehensive Economic Cooperation Agreement with Singapore in the wake of differences between the two on services and investment.

Though Singapore has, by and large, accepted India's formulation on rules of origin, which includes transformation at the four-digit classification level and a minimum value addition of 40 per cent, it is seeking flexibility from this principle on a large number of products.

Singapore is also keen that neighbouring countries like Malaysia and Indonesia qualify under the rules of origin since it is an island economy with its manufacturing closely integrated with neighbouring economies. India is opposed to this stand.

On the other hand, India is pressing for a Customs cooperation with Singapore since it is a major banking centre that invoices shipment from third countries.

However, Singapore has taken the stand that this is against its laws. In services, the major difference of opinion is the definition of beneficiaries.

While Singapore wants all juridical persons established in that country, including those owned or controlled by foreign persons, to enjoy the benefits of the CECA, provided they have substantial business operations in Singapore, India is opposing this saying that the benefits of the CECA should only be enjoyed by juridical persons established in Singapore and owned or controlled by Singapore nationals or Indian nationals.

Singapore has also asked for portfolio investment to be covered under CECA along with opening up of retail trade but India has opposed these demands.

The island country has also sought higher FDI limit in telecom, insurance and lowering of the threshold limit on the area requirement for FDI in housing.

Officials said though Singapore had offered a fairly good package on services, the present visa regime was not liberal enough to take advantage of the concessions being offered.

The ministry has circulated a draft Cabinet note on the CECA with Singapore giving the current state of play, they added. A high-level team from the ministry is holding negotiations with their counterparts in Singapore to sort out issues coming in way of finalising the agreement.

Commerce and Industry Minister Kamal Nath is also scheduled to undertake a two-day visit to Singapore from September 8. He is slated to meet his counterpart George Yeo, Minister and other officials.