The world’s two fastest-growing economies, India and China, are clearly at different stages of development and make for unfair direct economic comparison. But parallels can be drawn. Since Prime Minister Narendra Modi came to power in 2014, his team was tasked with the job of plugging India’s deficit at a time when public funds were needed to finance critical infrastructure, with private companies being mired[mI(-u)rd(stuck,फंसा)] in debt. While he laid out an ambitious plan to liberalise India’s economy and develop ports and roads to attract capital and transform the nation into a manufacturing hub, restoring investor confidence would be less than cushy[kû-shee(easy,सरल)]. But India doesn’t have to go it alone.
China’s palmy[paa-mee(successful,सफल)] leverage on Hong Kong as a launch-pad to engage the international business community serves as a meaningful case study as India further opens up to foreign investment. What India needs is a partner. A collaborator to India, as Hong Kong is to China, and one that renders[ren-du(provide,देना)] greater access to the international investor community.
Hong Kong’s role in propelling[pru'pe-ling(incite,उकसाना)] China and its currency into the global financial arena cannot be understated.
So india needs a partner
As an established international financial hub, Singapore stands out. The two governments have had a rugged[rú-gid(strong,मजबूत)] history of cooperation, and Singapore is India’s biggest trading partner in ASEAN and one of its largest investors.
Singapore can also support India’s smart cities development plan. Singapore’s open trade system and financial markets, coupled with incentives and a competitive tax regime, have already encouraged Indian companies to set up local operations and regional headquarters there.
Here lies a natural progression toward an offshore rupee bond market in Singapore. The Reserve Bank earlier this year gave Indian companies the go-ahead to raise rupee bonds abroad in the local currency to be settled in US dollar. This would allow overseas Indians and strongly-rated Indian companies to repatriate[ree'pey-tree,eyt(send back to country,स्वदेश भेजना)] foreign proceeds. Many overseas Indians already send money home and invest onshore for tax-free returns.
Singapore dollar bonds and US dollar debt issued by Indian companies have enjoyed much success in the city-state and many international banks base their trading of offshore India products in Singapore. This suggests that institutional and retail investors in Singapore understand the rupee peril[pe-rul(risk,जोखिम)] and buy into the India Inc. story. It would make sense for India to one day consider allowing offshore rupee bonds listed in Singapore to be settled in rupee to reduce transactional costs. And when India considers a sovereign bond issue, a Singapore listing would provide access to a wider investor base and deeper capital pools.
As India and Singapore celebrate 50 years of diplomatic ties, we need to focus on extending these strong relations
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