India to look into woes of S’pore businessmen
INDIAN PM’S VISIT
INDIAN Prime Minister P.V. Narasimha Rao has said he would direct his officials to look into problems faced by Singaporeans doing business in India.
On the cards are a possible revision of the current Double Taxation Agreement (DTA) between Singapore and India to makeit more favourable for the Republic. But there was no progress on the concerns of Singapore businessmen over India’s restrictive Land Ceiling Act.
This was revealed by Mr Barry Desker, Chief Executive Officer of the Singapore Trade Development Board, yesterday at a press conference following the conclusion of 12 joint-venture agreements between Singapore and Indian businessmen.
He said the concerns were brought up during Mr Rao’s meeting with the businessmen in the morning. Prime Minister Goh Chok Tong was also present at the hour-long session.
One of these was the DTA between the Republic and India. The agreement clarifies the tax obligations in the respective countries by spelling out the taxing rights of Singapore and India on all forms of income flows between them.
“The point was made that the current DTA was less favourable than what India has with Mauritius,” said Mr Desker. The current DTA that India has with Mauritius allows for a repatriation of profits, interest earnings and royalties.
It also allowed for capital gains arising from investments in the Indian stock market at a more more favourable rate than what it allows for between India and Singapore.
Said Mr Desker: “Singapore’s position as the 16th largest investor in India arises from the fact that more and more investments are being channelled through Mauritius.
“The belief is that if we have a revision of the DTA to contain a more favourable clause, this would lead to more investments in India.”
He said that Mr Rao had directed his officials to examine the current pact between the two nations.
“The Indian Prime Minister’s response was that if India had granted it to one country, this was an issue that could be looked at with other countries,” he said.
A major issue for Singapore businessmen was the Land Ceiling Act, which prescribed limits on the size of properties and did not allow foreigners to invest in real estate in India.
Asked what Mr Rao’s response was to this issue, Mr Desker said: “The Prime Minister’s point was that this was also a concern of many businessmen in India.”
Mr Rao’s meeting with the Singapore businessmen showed clearly that they encountered problems doing business in India despite the economic reforms.
Some other difficulties have been mentioned in publications, such as the Economist, which Senior Minister Lee Kuan Yew cited in his introductory remarks to the Singapore Lecture that the Indian Premier delivered on Thursday.
According to an article in the Economist magazine on Aug 6, the Indian government still owned 75 per cent of India’s industrial assets in spite of privatisation.
It said reform was continuing but in a messy and haphazard fashion. Itrecommended changes in labour and company laws to make it possible to wind up companies.
It also recommended selling sick company assets or sacking workers whether or not unions liked the idea.