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Doing Business in Singapore VS India
Indian Economy Boasts a Stable Annual Growth Rate
The Indian economy has witnessed a paradigm shift since the last decade and is on a robust growth trajectory. Today, the Indian economy boasts a stable annual growth rate, booming capital markets, and rising foreign exchange reserves. Since 2014, its gross domestic product, GDP, has increased around 7.5% yearly. PwC projects real GDP expansion of 7.3% this year. The consulting firm forecasts 7% growth in 2018 and an average of 6.5% yearly growth from 2019 to 2023.
The International Monetary Fund (IMF), in its World Economic Outlook Update said the Indian economy will grow by 7.4 per cent in 2018 and estimated 7.8 per cent in 2019. This makes the country the world’s fastest-growing economy in 2018 and 2019, the top ranking it briefly lost in 2017 to China. India is set to become the world’s youngest country by 2020 with an average age of 29. Nearly two-thirds, 64%, of its population will be in the working age group. At a time when one million people are entering the labor force every month, India is swelling with the human potential to spur innovation and productivity. A young population goes hand in hand with long-term economic growth as people form households, buy homes and raise kids. The Indian government has also made a number of policy changes during the past 10–15 years to reduce the discriminatory bias against foreign investors.
The Indian government has introduced many other significant changes to encourage FDIs in India. For example, the Securities and Exchange Board of India (SEBI) recently formulated the guidelines to encourage the operations of foreign brokers, on behalf of registered Foreign Institutional Investors (FIIs), in India. Due to this, the foreign brokers can now set up rupee or foreign currency-denominated accounts to credit inward remittances, brokerage fees, and commissions. The Indian government has eliminated the condition of dividend balancing for all but 22 consumer goods industries. In addition, the Reserve Bank of India (RBI) now allows 100% foreign investment when it comes to the construction of roads or bridges. In the March 1995 budget, the peak custom duty rate was lowered significantly from 65% to 50%.
Optimism in the Indian Economy
India’s stock market rally the first four months of the year came as the Bharatiya Janata Party’s won key state elections in mid-March. The political victories lift the chances that Indian Prime Minister Narendra Modi can put through the BJP’s reform agenda. Modi will remain in power until at least 2019. He will likely boost plans to build more infrastructure. The resilient nature of the Indian economy can be gauged from many leading indicators, such as freight movement at major ports, an increase in hiring, and encouraging data from various key manufacturing segments, namely cement and steel.
Recent indicators from reputed indices, such as ABN Amro’s Purchasing Managers’ Index (PMI), UBS’ Lead Economic Indicator (LEI), and Nomura’s Composite Leading Index (CLI), also support this optimism in the Indian economy. Despite political uncertainty, infra-structural deficiencies, and bureaucratic hassles, India presents an optimistic scope for overseas investment and is taking necessary steps to attract more foreign investors. No business, irrespective of its size, that is aiming to become a global player can afford to ignore the Indian market. India’s positive investment climate and vast consumer markets has resulted in a decade of phenomenal growth. India has been growing at least twice as fast as the United States. And even today, with oil prices going up and productivity going down on a global scale, India is still growing at almost 7 percent a year. Again, more than twice the rate in the U.S. India’s domestic consumption, generally led by the private sector, has played a significant role in India’s growth and is expected to remain firm as more people enter the workforce and the emerging middle classes. India’s wealthiest consumers (those earning US$1m or more in PPP terms) will increase by 40 million in the next 10 years! Every sector within India’s consumer market is booming, making India far less vulnerable to external shocks and pressures than other emerging markets.
Singapore is a Key Regional & Global Hub For Entrepreneurs
Singapore on the other hand is also a strong, emerging economy and reputed for its integrity, quality, reliability, productivity, rule of law, and enforcement of intellectual property rights, Singapore is a sure bet for future investments.
The Southeast Asian island city-state of Singapore is one of Asia’s, if not the world’s, most modern cities, with a population of 5.5 million. It is also a major Asian financial hub, with a stock market worth $473 billion. Known for its pro-business environment as well as ability to attract sizeable foreign investments and business entrepreneurs, Singapore’s world-class reputation is what makes it a key regional and global hub for entrepreneurs. Strategically surrounded by emerging Asean economies, Singapore boasts geographic and economic advantages that support a diverse and large fund management sector. The Singapore economy is primarily supported by activities in the manufacturing and services sectors. In addition to the multi-cultural nature of Singapore’s workforce and ability to attract global talent, the city-state is seeking to become a global knowledge capital and concentrates on knowledge-intensive industries.The workforce in Singapore is highly educated, motivated and productive; it is also proficient in English – the language of international business.Manufacturing activities account for about a fifth of the country’s overall Gross Domestic Product (GDP) while the services sectors contribute approximately two-thirds of GDP. In order to see exactly why Singapore is a preferred business location compared to other Asian countries, is suffices to say that compared to China, India and Japan three of the strongest economies in the region, the city-state offers incentives targeted to specific industries and foreign investors can apply directly with the Government for them.
Singapore‘s open immigration policy has increased its talent pool and provides businesses with the opportunity to hire the best personnel from anywhere in the world. In cooperation with industry partners and educational establishments, the government is trying to develop training and scholarship programmes, to make sure that the workforce is future-ready.
The Agency for Science, Technology and Research ensures that Singapore has world-class R&D facilities and expertise. With 12 research centres dedicated to technological disciplines, Singapore attracts a world class community of researchers and specialists from all around the globe. Singapore is a global leader in areas of manufacturing such as electronics and petrochemicals and remains an attractive base for complex manufacturing activities. Probably the biggest draw for doing business in Singapore is the investment environment. The national reserves are abundant enough to withstand 10 years of recession, the government consistently stays stable with 1 party in power and has one of the lowest corruption rates in the world. To attract businesses ready to invest in Singapore, the government keeps its tax rates and tax laws competitive and takes a strategic, holistic approach towards stewardship of key pillars of the economy, such as petrochemicals, electronics, and clean energy. The country has placed a great deal of commitment into developing a strong domestic regulatory framework to protect IP rights. It is currently rated the best place in Asia and 4th in the world for IP rights protection in the Global Competitiveness Report 2015 – 2016 (World Economic Forum).