Poor Policies in India are Leading Businesses to Singapore

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Disorganized government, head-scratching policies, and widespread corruption have clouded the outlook of India’s business climate with plenty of uncertainty, steadily eroding foreign investment in the once-promising country and leading investors to more business-friendly countries such as Singapore.

Singapore Company Registration

Singapore Company Registration

“India is widely regarded for its potential, but Singapore has long been a steady global investment destination.”

A recent report by global ratings agency Standard & Poor’s warned that India is seriously at risk of losing its investment-grade rating. The findings follow the agency’s statement in April saying that it had revised the outlook of India’s long term sovereign rating from ‘stable’ to ‘negative’ due to factors such as slowing growth combined with an increasing national debt and fiscal deficit. The downgrade comes amid poor economic numbers, as growth in the country slowed from more than 10 percent for all of 2010 to a lowly 5.3 percent during the first quarter of 2012.

A factor that has been singled out as a big reason for the economy’s downfall is the government, which has been constantly criticized for its political standoffs and a lack of meaningful economic reforms. In fact, a number of India’s policies have had adverse effects on India’s foreign investment.

One such example was the government’s previous plans to privatize dozens of airports in smaller cities all over the country. International airport developers were excitedly investing in India due to the potential opportunity, when the government abruptly changed its mind and decided not to award the more than US$808 million worth of projects. The fallout resulted in various companies reducing or even completely withdrawing their investments in India, including Germany’s Fraport, the world’s second largest airport developer.

Corruption and government inefficiency have also put off many foreign investors from the country. Telecom firms Etisalat of Abu Dhabi as well as Bahrain Telecommunications left India after their licenses were among those ordered cancelled by an Indian court amid a corruption probe. Telenor, a Norwegian telecom giant which has invested around US$2.5 billion in India, has also threatened to pull out of the country.

Taking a cue from companies such as Fraport and Etisalat, many other foreign companies are now looking elsewhere to take their investments. One of the most popular destinations is Singapore, where strong economic policies and pro-business government have provided a stark contrast to the situation in India.

“India is widely regarded for its potential, but Singapore has long been a steady global investment destination due to factors such as its location, taxation, and enterprise-friendly government,” said Ms. Jacqueline Low, Chief Operating Officer of Janus Corporate Solutions, a Singapore company registration agency and parent of GuideMeSingapore.com. “Even when India was one of the rising stars in the world economy, a look at the business climates of the two countries shows that Singapore is still the better choice in many aspects.”

A comparison between the two countries shows that Singapore significantly outpaces India in many aspects important to investors, including:


Singapore’s corporate tax rate is approximately 8.5% for profits up to S$300,000 and a flat 17% rate for profits above that number. In comparison, India’s corporate income tax rate is 30.9% for taxable income up to INR 10 million, and 33.9% for taxable income above INR 10 million. There is no dividend tax or capital gains tax in Singapore. Meanwhile, India has been criticized for continually increasing and creating new taxes to gather more funds for the government.


Singapore, which has been ruled by the People’s Action Party since gaining its independence, is world famous for its efficient government and perceived lack of corruption. Unlike the constant political head-butting that currently takes place in India, the dominance of a single political party in Singapore means the government typically makes swift and decisive economic policies.

Business environment

In contrast to India, the Singapore government encourages entrepreneurs to set up their own companies through various tax and investment incentives, and does not restrict the inflows and outflows of capital. The minimal red-tape and bureaucracy and efficient infrastructure makes it very advantageous for any foreign firms to invest and set up businesses in Singapore.

About Janus Corporate Solutions Pte Ltd

Janus Corporate Solutions Pte Ltd is a leading Singapore-based firm that provides comprehensive and cost-effective Singapore company formation, employment visa, accounting and tax filing services to businesses and entrepreneurs worldwide. For more information, visit http://www.guidemesingapore.com


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