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The case for stronger S'pore-India partnership
AS India celebrates its 70th year of independence, I am more sanguine about its prospects than I've been for a number of years. In the short term, India still has a number of headwinds it needs to wrestle through. The cyclical investment climate continues to be soft, and non-performing loans in the banking sector mean availability of capital to fund economic growth remains challenged. On the positive, many of the measures of the current Modi administration are a boon for the business climate, and are starting to filter through.
All in, I believe India's economy has bottomed out and will pick up pace in the next few years. As we look out further into the medium term, I am even more bullish about India's prospects. India is among a handful of countries in the region with favourable demographic dividends. With its young and growing labour force, rising middle class, and relatively low household leverage, there is no doubt in my mind that India is on a structural rise.
All this bodes well for the Singapore-India economic partnership, both on the trade and business front.
On the trade front, the West - the United States under President Donald Trump and Europe, post-Brexit - is seeing globalisation in retreat. This growing insularism is a worrying trend that Asia needs to counteract. As a small, open economy, Singapore is naturally a champion of free trade. With the Trans-Pacific Partnership stalled, the Regional Comprehensive Economic Partnership (RCEP), a platform bringing together 16 Asian nations, takes on greater importance. India's inclusion into the RCEP will help strengthen Asean and South Asia trade relations, and boost economic growth in Asia.
The Comprehensive Economic Cooperation Agreement (CECA) signed between Singapore and India in 2005, the first such deal by India with any nation, has also brought mutual benefits to both economies over the last decade. Tariff concessions, favourable tax breaks for investments and easing of market entry norms for certain services have been a win-win. Both governments have shown interest in reviewing the CECA treaty to further deepen relationships, and if the few outstanding thorny issues can be resolved, this should also yield economic benefit.
On the business front, India has opportunity but needs capital and partners with demonstrated capability to execute across sectors. Singapore provides that. Singapore in turn needs an external growth market as it moves from GDP to GNP focus. India provides that.
The opportunities for business collaboration are wide-ranging and span infrastructure, housing, power generation, renewable energy, skills training, etc.
Singapore is even involved in helping India develop whole cities into smart cities, providing solutions covering energy, environment, building and governance. As an example, in May this year, Ascendas-Singbridge and Sembcorp Development were officially appointed as master developers of Amaravati - the new capital city of Andhra Pradesh.
Indian Finance Minister Jaitley has projected that there is a need for US$1.5 trillion worth of investments over the next decade, with a focus on sanitation, rural electrification, roads, highways and ports. Singapore has a lot of world-class companies that can partner with India companies to drive this infrastructure build.
Furthermore, with rapid changes in technology, both countries also stand to benefit from a deeper collaboration given the common vision of a digital future - Singapore with its "Smart Nation" agenda, and India with its "Digital India" vision. Singapore wants to build a smart nation based on research and development and application of new tech. India has a wealth of talent in areas of technology, including an ability to adapt solutions at low cost as demonstrated by its very successful space programme. This could prove a good partnership.
At the same time, India, with its India stack and "JAM" trinity, including Aadhaar, its billion-person biometric database, presents enormous opportunity for the digital delivery of services. It is for this reason that DBS chose India as our first market to launch a groundbreaking mobile-only bank in April last year. In 18 months, the offering, which we call digibank, has acquired 1.4 million customers.
For Singapore, the uptick in India's economic growth prospects in the next few years will provide a strong counterweight to China, which is in the midst of a structural slowdown. In the midst of increasing trade protectionism and shifting geopolitical shifts, India and Singapore will also benefit from stepping up bilateral trade and business collaboration, harnessing each other's strengths.
- The writer is the CEO of DBS Bank.