SINGAPORE - With nearly $28 billion of Singapore investments in India and over $29 billion of Indian foreign direct investment (FDI) in Singapore, the first Budget to be presented by the newly-elected BJP government in India on July 10 will be watched with keen interest here in Singapore. In recent years Singapore and India rank among each other's top 10 global trading partners with bilateral trade in the $25 billion to $30 billion range. Furthermore, over 6,000 Indian companies in Singapore form the single largest foreign business community in Singapore. So tabla! spoke to a cross section of business leaders who are actively involved in Singapore-India business for their views on the forthcoming Indian Budget.
Given the scale of two-way investments and trade, it is only to be expected that making India an investor and business-friendly destination was on top of the minds of most of the people we spoke to. Executive director and CEO of Ascendas India Trust Jonathan Yap wants the new government to remove restrictions such as project size for foreign investors and allow institutional capital across commercial assets to help improve quality of real estate assets in India.
He also wants the Indian government to "create a single window clearance for large infrastructure projects and revive public private partnerships, both of which have already been outlined by (Indian) president Pranab Mukherjee".
He is looking for more consistent policy-making and implementation from India. Said Mr Yap: "For instance, the government would regain some investor confidence by reinstating the original tax benefits for special economic zones."
Resident director ASEAN region of Tata Sons K.V. Rao also feels that "FDI should be kick-started" by rationalising tax laws to remove ambivalence and impediments. Mr Rao, who is based in Singapore, adds: "India badly needs a structural shift in infrastructure." He wants the new government to clear projects, provide incentives and a policy that supports long-term FDI in areas like roads, ports and waterways.
This is a view shared by Mr S.V. Padmanabhan, who is the chairman of the Institute of Chartered Accountants of India (ICAI), Singapore Chapter and a director of Singapore Indian Chamber of Commerce and Industry. He suggests the Indian government implement policies which will facilitate FDI in key infrastructure developments.
Providing a view from the Indian side, Mr Rashesh Shah, co-founder and chairman of Edelweiss Group, one of India's most diversified financial services groups, says "the government needs to make India an easier place to do business - in terms of regulatory clarity, reduced red tape and processes and a more business-friendly approach". He feels this is a good opportunity for the government to open up FDI in various critical sectors such as defence, insurance and pensions.
Mr Shah wants the retroactive tax laws of the past to be repealed and the government to give confidence on its taxation approach. He also wants a reduction/rationalisation of commodity transaction tax, securities transaction tax, etc.
Mr Yap of Ascendas suggests that the Indian government streamline the tax regime by introducing GST to replace various taxes including excise duty, service and value-added tax. "Businesses would also benefit from consistent tax enforcement," he said.
Mr Padmanabhan also wants to see the long-awaited implementation of a uniform GST. "Simplifying the direct tax/indirect tax administration and dispute resolution procedures would make it investment friendly," he added.
Dr Aurobindo Ghosh, assistant professor of finance and programme director, Sim Kee Boon Institute for Financial Economics at Singapore Management University, shared his concern about inflation in India. "With energy price increase, cost of transportation is possibly set to go up. However, with a pass-through costs increase will affect cost of living and consequently increased inequality", he says. "Energy prices which directly impacts food price inflation, must be controlled," he adds.
Both Mr Yap and Mr Rao emphasised the importance of job creation. Mr Yap wants the Budget to "provide incentives for foreign direct investments across the manufacturing sector to boost long-term job creation". Mr Rao wants a "push for vocational education and recast of laws".