India, Singapore firms invest $51 bln in each other's markets

Indian and Singapore businesses lead in investing in each other's markets, tapping on business growth potential, having committed $51 billion.

Singapore was India's largest investor last year with $5.98 billion, or a quarter of the inflow, and $26 billion accumulatively since 2000, reported Tabla!, an English language weekly.

Comparatively, Indian companies have made accumulative investment of close to $25 billion in Singapore, said the tabloid in a report on 50 years of India-Singapore Diplomatic relations.

"The Indian FDI (Foreign Direct Investment) into Singapore has grown at a whopping compounded annual growth rate of 381 per cent since 2005," said Anil Kishora, country head and Chief Executive Officer of the State Bank of India in Singapore.

The investment was especially boosted by the India-Singapore Comprehensive Economic Cooperation Agreement signed in 2005.

The tabloid pointed out that Indian investment in Singapore has surpassed China's $14.2 billion during the same time. Some 6,000 Indian companies are registered in Singapore at the latest count, making it the largest business community in the city state.

Two years ago, the number was 4,000, according to Indian businessmen.

Tata Group’s activities in Singapore today are a microcosmic representation of its $100 billion ventures across 100 companies worldwide, said K V Rao, Tata's Singapore-based resident director for the Asean region.

Analysts said Indian companies see a growing international business opportunities to be in Singapore, especially using it as a platform to venture into the region and the world as they globalize.

Singapore is a major routing point for setting up holding companies that are used for international investment in Asia or globally, as it is an international financial centre with easier financing and refinancing schemes.

"In fact, Singapore has emerged one of the preferred offshore financial centres for Indian corporates to set up SPVs (Special Purpose Vehicles/Companies)," said Kishora.

Among leading deals done by Indian corporations in Singapore is the Bharti Airtel Ltd’s acquisition of telecommunication businesses in Africa and Bangladesh.

Singapore-based subsidiary Bharti Airtel Holdings acquired Zain Africa International BV through a company in the Netherlands and expanded to 15 markets in the African continent.

It also acquired Warid Telecom International Ltd in Bangladeshi and created Airtel Bangladesh Ltd.

Indian professionals, who have made Singapore their home, have been involved in various parts of some of the billion-dollar deals.

The contribution of this bi-cultural Indian diaspora to the multi-billion dollar two-way investment between India and Singapore never shows up in any FDI statistics, said SN Venkat, a senior associate director at Singapore Management University.