The special economic agreement will benefit both countries in the long term.

The Comprehensive Economic Cooperation Agreement (CECA) signed between India and Singapore this week is not only a remarkable economic collaboration treaty between the two countries, but is also a pointer to the emerging economic importance of Asia. It also marks the culmination of increased economic co-operation between the two countries in the past two decades. Now, with the formal signing of the agreement on June 9 by the Prime Ministers of the two countries, many more windows of opportunities will open. To begin with India will abolish import duties on 506 items (mainly pertaining to information technology and computers) which will help Singapore's IT companies to get freer access to the Indian IT market. In turn, it will be beneficial to Indian software, biotechnology and pharmaceutical industries. India will gradually abolish duty on 2202 other items and reduce duties on a number of others. There will be a negative list of 6551 items where no duty concessions will be granted. The net effect is that in future nearly three-fourths of Singapore's exports to India will be duty-free.

The agreement will also provide a major boost to investment. It avoids double taxation and allows Singapore-based banks and financial institutions to open branches and make investments in India. Two large investment institutions have been allowed to own a combined 20 per cent of Indian companies which is double the limit allowed for other foreign institutions. The government expects that as a result of all these steps the country will attract foreign direct investments to the tune of $ 5 billion. The capital market may receive another $ 2 billion in investments. A host of Singapore-based real estate development companies have already expressed their interest to invest in India.

Singapore too will benefit in a big way. The opening up of the Indian economy will provide it the right opportunity to invest its mammoth cash surplus. As the Indian economy is among the fastest growing in the world, the returns for India will certainly be more attractive than from the matured markets of the US and Europe. Though the deal is a clear win-win for both States, they have to be vigilant and ensure that other countries do not start exporting their goods to India without duties through the Singapore route.