India, Singapore sign CECA to boost investments
Jun. 29, 2005
Prime Minister Manmohan Singh and visiting Singapore Prime Minister Lee Hsien Loong, on Wednesday, signed the much awaited Comprehensive Economic Co-operation Agreement (CECA).
CECA is an integrated package comprising a free trade agreement, a bilateral agreement on investment promotion and protection, an improved double taxation avoidance agreement and a work programme for cooperation in healthcare, education, media, tourism, customs, e-commerce, intellectual property, and science and technology.
The agreement is being viewed upon as prime object towards boosting investment in the region. Incidentally the CECA with Singapore is India’s first such agreement with any country and also the first bilateral agreement in services. Earlier, Union Minister of Commerce and Industry, Kamal Nath, while approving the CECA with Singapore had said: "CECA would be a milestone in further cementing India’s traditional ties with Singapore... This is India’s first CECA with any country. It is also for the first time that India is entering into a Bilateral Economic Integration Agreement in Services".
Under this agreement, all goods manufactured in India would have entry into Singapore at zero duty, which will also help in developing supply chains from India as Singapore is a well trading hub. CECA will besides all this, also provide provisions for the mutual recognition of Indian education degrees, thereby providing new avenues to Indian professionals.
"Singapore has offered all products made in India entry at zero duty into Singapore. It is expected that CECA would be helpful in developing supply chains from India, since Singapore is a known trading hub. The mutual recognition agreements in goods provided in CECA would increase India’s exports especially in areas like milk and milk products and poultry. The liberalisation of the services sector would improve efficiency in economy, while the mutual recognition of education degrees would provide new avenues to Indian professionals," Kamal Nath had said while elaborating the benefits of CECA.
This agreement also has sufficient safeguards to prevent third country goods from coming in through Singapore. Stringent Rules of Origin comprising simultaneous application of change in tariff heading, value addition of 40 percent and some well defined insufficient operations have been prescribed under CECA to ensure that only the goods which are actually manufactured in Singapore and India benefit under this Agreement.
Also in Services, India and Singapore have taken commitments beyond their offer at the WTO. India and Singapore have committed to opening investments on a positive list basis with features in-built for protecting investments made by each other in either country. The existing Agreement on Double Taxation Avoidance (DTAA) has also been amended through a protocol, providing, among other issues, sharing of information and improved tax treatment.
The pact has been under discussion for nearly two-and-a-half years but progress was slow due to difficulties in defining the types of exports from Singapore, which would enjoy tariff-free status in India.
Later on, Union Home Minister Shivraj Patil and Singapore Foreign Minister George Tong boon Yeo, also signed an agreement on Mutual Legal Assistance in Criminal Matters.