Singapore pact gets final touches

India may not grant too many concessions under CECA

The government may take a tough stance on granting flexibilities to Singapore banks under the Comprehensive Economic Cooperation Agreement (CECA), which is currently under negotiation.

Singapore has sought an approval for setting up 18 branches each for three of its banks in India.

Finance ministry officials told Business Standard that the Reserve Bank of India had turned down the request saying India had committed to allow only 12 foreign bank branches in the country under the General

Agreement on Trade in Services (GATS) of the World Trade Organisation. While India had gone beyond its commitments, the officials said, granting licences to 54 branches of banks based in Singapore every year could lead to similar demands from other countries.

Bilateral cooperation in investment is one of the main issues being discussed between senior officials from India and Singapore this week. The two sides have already reached an agreement on the rules of origin for products. They have agreed to a transformation at a 4-digit level of ITC (HS) classification for goods, together with a value addition of 40 per cent.

Singapore is also seeking the removal of the 10 per cent cap on voting rights of foreign shareholders in private banks. A proposal to do away with the cap is already under the government's consideration but the officials said an exception would not be made for Singapore.

The CECA is modeled on the lines of free trade agreements for merchandise and encompasses opening up of services trade and other trade facilitation measures.

Singapore had sought flexibility in a host of service sectors, but India is not very amenable to the proposals. India wants to restrict its commitments to the level under the GATS.

The other demands from Singapore include a higher foreign investment ceiling in sectors like telecom and insurance.