Singapore – Second largest FDI source

Singapore as a leading source of FDI for India

As far as India is concerned, Singapore’s economic growth comes as good news.  It is consistently the second largest source of FDI into India after Mauritius since 2008.  With a total investment of Rs 58,090 crore, its investment is mainly into telecom, offshoring services, oil refineries, power, food processing and electrical equipment. 
 
Increasing FDI since 2008

So, it’s way ahead of US, UK and Netherlands, the other top investors in India.  It’s quite surprising given the size of the country, which is much smaller as compared to the countries like US, UK and China.  Before 2008, the second position was occupied by the US. UK was third, which has slid to fourth position now.  In 2008, the FDI jumped by $1 billion, whereas FDI from US was just $300 million.  UK’s long-term investment flow was just $50 million. 
Before that the FDI from Singapore was below $600 million and it was much less than US and UK.   Earlier the contribution of US and UK used to be around $900 million and $1900 million respectively.  The credit crunch is also cited as one of the reasons for a downfall in investment from US and UK.
 
Temasek and GIC

The sudden inflow from the Island state is also associated with FDI from two major sovereign funds Temasek and GIC.  These funds were active private investors before, and with Temasek acquiring additional strength, the FDI in India boomed.  Just a year before, the two major funds were involved in financial deals in India worth $3.5 billion and it was a whopping one fifth of the total private equity deals made in 2007.  

A decade of investment

The total foreign direct investment from Singapore since year 2001 to year 2008 was just $6 billion, which was just next to Mauritius ($30 billion). Even during that period the investments from US and UK were just $5.5 billion and $4.5 billion respectively, which was way too less as compared to Singapore.  So, it’s clear that Singapore has always been a leading financial partner of India with heavy investments into our country. 
Till June, 2008, Singapore’s share in cumulative FDI in India was around 8% of the global investments, which makes it a leading FDI source country for India.  The major chunk of foreign direct investment in India went to sectors like services, IT, telecom, construction, metallurgy, automobiles and pharmaceuticals.  
   
Recent measures to improve FDI

Indian government liberalized FDI norms in 2012 after a huge slump in its FDI due to poor performance to economy.  FDI caps were modified in various sectors such as petroleum, natural gas, media and tea.  Certain sectors such as civil aviation, retail and power received the maximum benefits of liberalization.

Singapore, a leading investor in 2013

In April 2013, Singapore again infused US$1.3 billion in Indian market.  It was followed by Mauritius the largest investor and US; however their contribution was just a fraction of Singapore’s viz. US$ 350 million and US$ 175 million respectively. So, Singapore again emerged as a leading source of FDI in India. The island state’s financial prowess is considered to be auspicious for India.  Singapore has emerged as a boon for Indian economy.