Prime Minister Narendra Modi’s visit to Singapore has
provided new strategic direction to the steadily growing relationship between
India and Singapore. The historical connection dates back to 1819 when Sir
Stamford Raffles established a trading station in Singapore, and until 1867,
the city-state was governed from Kolkata. Today, this relationship is marked by
economic cooperation, strategic alignment, and emerging opportunities in
various sectors.
A Financial Anchor
Singapore’s economic engagement with India has grown
substantially over the past two decades, with Singaporean entities investing an
impressive $160 billion in India. This makes Singapore the largest source of
Foreign Direct Investment (FDI) for India. These investments have been pivotal
in transforming key sectors, such as Singapore’s early stake in Bharti Airtel,
which helped drive India’s cellular revolution.
A recent highlight of the financial relationship is
CapitaLand’s announcement to double its funds under management in India to over
$14.8 billion, further cementing Singapore’s role as a financial anchor for
India. Additionally, Singapore has become India’s sixth-largest trading
partner. In 2024, Indian imports from Singapore amounted to $21.2 billion,
while exports to Singapore totalled $14.4 billion. Although the trade balance
favours Singapore, this reflects the complementary nature of both economies. India’s
growing middle class is a market for high-quality Singaporean goods and
services, while India meets Singapore’s demand for raw materials, technology,
and talent.
Strategic Convergence
Beyond economic ties, India and Singapore share strategic
interests, particularly concerning China’s assertiveness in the region. Defence
cooperation between the two nations is a key pillar of this relationship,
exemplified by the Singapore-India Maritime Bilateral Exercise (SIMBEX), which
has been held annually since 1994. This is the longest continuous naval
exercise India has with any country. There is now an opportunity to take this
collaboration further, with India considering the long-term deployment of its
Navy in Singapore, similar to its Air Force presence in Japan.
Singapore, despite its small size, is one of the top defence
spenders in the world, allocating over 3% of its GDP to defence. Its strategic
location at the crossroads of major global shipping routes makes it a vital
partner for India, as India expands its naval capabilities. This strategic
convergence could also boost India’s defence exports, including military
hardware and ammunition.
A New Frontier in Cooperation
The relationship between India and Singapore is expanding
into new areas such as health and semiconductor technologies. Additionally,
financial integration is deepening, with a growing number of Indian companies
listing on the Singapore Stock Exchange. Singapore has emerged as a gateway for
Indian businesses seeking global capital, while the GIFT City in Gujarat offers
Singapore new onshore investment opportunities.
Today, Singapore ranks alongside Japan as an indispensable
partner for India. Prime Minister Modi’s visit has added depth to this vital
Asia-Pacific alignment, making the relationship mutually beneficial in more
ways than ever before.
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