HYDERABAD: After contracting steadily for months, India’s exports to Singapore are back in black.
In April, exports grew 24%, while imports shot up by a staggering 269%, led primarily by medical equipment and healthcare supplies. Simon Wong, High Commissioner of the Republic of Singapore to India, believes the trade imbalances will further get corrected as the economic recovery picks up pace.
According to Wong, the pandemic-induced lockdowns have hit India’s exports, while the second wave forced the country to import heavily. “We have seen fewer exports, maybe because of the lockdowns...Two, imports have gone up in several areas, primarily led by health-related supplies,” he told The New Indian Express.
Major among the imports were raw materials for vaccines. With the US imposing a ban on specific raw materials to India, that need was partly filled in by Singapore. Besides, the tariff corrections on gold fuelled gold imports from Singapore. In all, India’s exports to Singapore contracted by 2.7% in FY21, while overall exports contracted by nearly 3%.
Foreign investments from Singapore continue to rise. Last financial year, island nation was the largest foreign investor pumping in about $17-18 billion, or about 29% of India’s total FDI. “It’s nearly a third of total FDI in India. If you look at last financial year, investments continued even during the first wave,” he said. Focus areas for future investments, Wong explained, will include data centres, real estate, fintech, startups and emerging areas like life sciences and agritech.
When global demand, which is currently in a slump, revives, Wong believes investments and trade will bounce to their natural rate of growth. Last year, hit by Covid-19, Singapore’s overall trade like other economies contracted by 5.5%. It now hopes to grow anywhere between 4 and 6%. Aided by the lower base, we may register a 3-4% growth in FY22, and we will be out of the woods,” Wong explained.
Meanwhile, India’s first-ever bilateral pact (with any country) signed with Singapore in 2005, received criticim in Singapore over concerns on Indians stealing jobs and livelihoods. The Comprehensive Economic Cooperation Agreement (CECA) allows lower tariffs making goods and services from Singapore competitive in the Indian market. The Singapore government shot down the criticism giving a detailed reply in the Parliament about how bilateral trade grew by 80% from S$20 bn when CECA came into force in 2005 to S$38 bn in 2019.