The cultural and business relations of India with Singapore dates back to the 9th century Chola dynasty and most Indian business entrepreneurs feel at home while anchoring their business vehicles on Singaporean soil. More than 10% of Singapore’s citizens have Indian ethnicity with Tamil as an official language. The name Singapore has also been derived from Sanskrit.
In a growing trend over the last few years, many Indian businesses, especially startups are choosing South East Asia for their business expansion and company registration in Singapore is becoming the most favoured choice. Indian companies looking for capital can have easier access to several fundraising opportunities to set up their business establishments in Singapore.
India and Singapore have long been enjoying very good bilateral trade and investment relationships and the Comprehensive Economic Cooperation Agreement (CECA) reached in 2005 further boosted the partnership.
Several MOUs were also signed between the two countries during the visit of the Indian Prime Minister in 2018 to foster collaboration between Indian and Singapore startups and pave the way for the Indian companies in Singapore to better explore the Asian markets.
Singapore contributed to more than 29% of FDI received by India during 2020 with its export close to 9 billion USD. The country is also home to over 8,000 Indian companies.
Why Indian Companies are confident of doing business in Singapore?
Singapore is known as the gateway of Asia and has a robust and resilient economy, skilled and educated workforce, excellent infrastructure facilities and a high standard of living with a per capita GDP close to 60,000 USD in 2020 offering Indian startups an ideal business climate for making investments with greater confidence. A high level of digital infrastructure and the adoption of innovative technologies have also played a crucial role in advancing the business competitiveness of Singapore. Indian FDI to Singapore touched more than USD 60 billion in 2018.
IIT- Kanpur in a joint effort with the Singapore Indian Chamber of Commerce and Industry (SICCI) launched a Start-Up Incubation and Innovation Centre (SIIC) that would act as a springboard for technology-based startup businesses.
Why Indian investors are more attracted to Singapore?
Innovative policies of the Singapore government are at the core of the country’s booming startup ecosystem. Besides cultural compatibility, many other reasons drive Indian investors to this foreign country.
1. Ease of doing business
Innovative policies of the Singapore government are at the core of the country’s booming startup ecosystem. Besides cultural compatibility, many other reasons drive Indian investors to this foreign country.
2. Strategic location in the heart of Asian flourishing market
Presently the Asian economy is the fastest growing in the world and with a GDP of almost 3 trillion USD backed by a large population of 650 million, this continent is all set to fly in a high growth trajectory.
3. Multiple bilateral treaties and agreements with India
Besides CECA with India in 2005, Singapore has also entered into Double Taxation Avoidance Agreement (DTAA), Bilateral Air Services Agreement, Defence Cooperation Agreement, MOU on Foreign Office Consultations, Mutual Legal Assistance Treaty, Mutual Recognition Agreement on Nursing as well as cooperation in fintech. DTAA substantially reduces the tax burden of Singapore based Indian holding companies.
4. Favourable Tax Climate
Singapore’s tax system is one of the top attractions for Indian investors. The country imposes a moderate corporate tax of 17% and doesn’t levy any capital gain tax. Significant tax incentives are offered by the government and especially during the first three years of incorporation of businesses. Income from businesses up to 74,570 USD are tax exempt. GST is imposed at a flat rate of 7% which is lower compared to many other countries.
5. World Class Infrastructure
Singapore provides world-class land, port and aviation facilities including a robust digital infrastructure.
6. Transparent Governance
The regulatory bodies in Singapore follow a high level of transparency with minimum bureaucracy. As most of the business activities are carried out online and free of any corruption.
7. Easy Access to Funding and Capital
Easy access to affordable financing is another reason that lots of Indian investors are being drawn to Singapore. The country has witnessed a meteoric rise in venture capital funding in recent years and is considered the top startup funding hub in Asia. Financing for new entrepreneurs or startups for business expansion is available through loans, equity funding, government grants and angel investing. The Singapore government has also initiated many grants and business accelerators for specific sectors.
8. Conducive import-export tax regime
Singapore only imposes customs duty on certain categories of imports including tobacco, liquor, automobiles and petroleum products with no export duty.
9. Liberal Immigration policies
Singapore offers EntrePass to overseas investors willing to start and operate a business in Singapore that can be obtained easily and transparently.
10. Strong Intellectual property (IP) Regulatory Framework
The Ministry of Law observes a strong IP policy to safeguard the interest of high technology companies
11. Fast and Effective dispute resolution
Singapore authorities provide quick and cost-effective resolutions of business disputes to Indian investors through the Singapore International Arbitration Centre (SIAC).
12. Partnership opportunity with a Singapore Company
Partnering with a Singapore company can be rewarding for Indian investors willing to set up a business in Singapore as it eliminates customer and business development from scratch reducing business establishment cost greatly. However, the process of checking registered companies in Singapore must be carefully verified through an online information retrieval system of ACRA.
Which company types of Indian investors can establish in Singapore?
Indian entrepreneurs desirous to start a business in Singapore can choose the following business structures
- Private companies limited by shares
- A Branch office
- A representative office (RO)
- A Variable Capital Company (VCC)
Conclusion
Singapore has come into prominence as one of the most attractive businesses and investment destinations in the world primarily due to government policies, free and transparent investment landscape, ease of doing business, skilled human capital, conducive start-up environment, smart technology adoption and sound technological infrastructure.
If you are in the lookout for setting up a company in this business friendly country, there are experienced and reputed corporate service providers with a local base who can help you on how to start a business in Singapore as a foreigner.
