Big Four executives explain Singapore's ascension as a source of FDI

31 May 2019 2 min. read
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Tax incentives are among the primary factors that have contributed to the increase in foreign direct investments (FDI) from Singapore, according to Big Four accounting and advisory executives in India. Government data reveals that FDI from Singapore last year was in excess of $16 billion.

India’s rapid economic growth in recent years has significantly improved its profile as a destination for investment. The country is set to become the second largest economy in the world by 2050, and a number of recent government reforms have paved the way for a more attractive business environment.

While the country continues to suffer from a number of obstacles that prevent it from being an ideal investment destination, overall FDI appears to be increasing, particularly from certain economies. Recent government data has shown that Singapore’s share in India’s FDI pool is growing rapidly.

Mauritius has traditionally been amongst the top investors in the Indian market, and Singapore has only emerged ahead of Mauritius on two occasions previously when it comes to FDI. Last year, the FDI inflows from Mauritius amounted to a total of just over $8 billion, while those from Singapore stood in excess of $16 billion.

Big Four executives explain Singapore's ascension as a source of FDI

Both countries occupy prime FDI positions due to their convenient locations to direct investments into the Indian market. Mauritius has traditionally occupied pride of place between the two, primarily because the two countries have a tax treaty in place to facilitate flows in finance.

The treaty led to a boom in the amount of FDI flowing through Mauritius to India, sourced from a number of major economies such as the US, the UK and Germany. The treaty with Mauritius was recently amended, alongside a similar amendment to the tax treaty with Singapore, both of which were aimed at encouraging investment.

According to experts at Big Four accounting and advisory firms PwC and EY, the growing profile of Singapore can be attributed to a number of changes in the Singapore market.  Partner & Leader for the Regulatory Practice at PwC India Akash Gupt attributed the change to a boom in private equity investors in Singapore.

EY India’s Partner & Leader for Tax Performance Advisory Rajiv Chugh added, “Now that there is tax neutrality, people are opting for Singapore as it is more accessible and approachable and offers tax incentives through lower tax rates if you locate your regional headquarters there.