New Delhi: India and Singapore will review their comprehensive economic partnership agreement, or Cepa, to expand the scope of liberalization, both in goods and services.
A joint agreement to this effect will be signed between trade minister Anand Sharma and Singapore’s trade and industry minister Lim Hng Kiang, who is currently visiting India, on 11 May.
“Both the countries had decided to review the Cepa every three years. This is part of the agreement,” a senior commerce ministry official said on condition of anonymity.
India’s first comprehensive trade pact with Singapore, signed in 2005, includes trade in goods, services and investment.
Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations (Icrier) said the review is necessary as India’s economy is now more open than in 2005.
“India’s commitment in goods under the Cepa with Singapore is lower than its revised offer to WTO (World Trade Organization) in August 2005 and its commitment under the Association of Southeast Asian Nations (Asean) free trade agreement (FTA),” Mukherjee said. The Asean FTA, which was signed in August, came into effect on 1 January. Singapore is a member of the 10-nation trading block.
Ram Upendra Das, senior fellow at the Research and Information System for Developing Countries, said the main intention of the review is to bring the level of liberalization in goods at least on par with the commitment under the Asean FTA.
Rajan S. Ratna, professor at the Centre for WTO Studies in the Indian Institute of Foreign Trade, agreed. “While India has about 5,000 negative list items with Singapore, out of 11,000 traded goods, its negative list with Asean is only 400. It does not make sense... There will be a problem with both exporters and importers.”
Singapore will gain if India agrees to cut tariffs in more traded items. India may expect more liberalization in services from Singapore.
The review may also incorporate a change in an unintentional offer by India in financial services, which allows a Singapore company to hold more than 10% stake in an Indian bank. Regulators don’t allow any individual or company, national or foreign, to hold more than 10% of an Indian bank, even under Cepa.
“By and large, that issue has been amicably solved,” the commerce ministry official said, without revealing details.
Mukherjee said it may not be as simple. “Singapore may ask something in return if we are not able to give what we have committed under the Cepa.”
Two investment arms of the Singapore government together have more than 10% stake in ICICI Bank Ltd. Singapore has always maintained that the two are separate entities.