Investing in India

This is what Indian PM Modi hopes to achieve in Singapore

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India's Prime Minister is due to arrive in Singapore on Monday in his final stop of a Southeast Asia tour to tout New Delhi's value as Asia's third-largest economy seeks a greater regional role.

After spending the weekend in Malaysia to attend two conferences—The ASEAN-India and East Asia Summits—Prime Minister Narendra Modi will spend two days in Singapore where the two nations will sign a 'India-Singapore Strategic Partnership,' a declaration of deepened ties in areas such as skills development as well as economic and cultural cooperation.

On the political sphere, Modi could take the opportunity to highlight India's desire for increased regional engagement at a lecture later on Monday, an idea discussed in Kuala Lumpur in relation to the widely-anticipated ASEAN Economic Community.

India's' Look East' policy, an initiative to revive links with Southeast Asia, was announced in 1994 by then Prime Minister P.V. Narasimha Rao during a Singapore visit and Modi could take this opportunity to explain how that concept has since progressed, noted Anit Mukherjee, assistant professor at Singapore's Nanyang Technological University.

In 2014, Modi's government remodeled the policy to "Act East," reflecting a change in priorities from economic and diplomatic engagement with Southeast Asia to broader security and defense ties across Asia-Pacific, in particular China and Japan, amid the mainland's aggressive geopolitical clout, explained think tank The Lowy Institute for International Policy.

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"Perhaps Modi has chosen the same venue to enunciate what we really understand by 'Act East' versus 'Look East,'" said Mukherjee.

Foreign investment will undoubtedly feature prominently over the next two days as Modi meets with Prime Minister Lee Hsien Loong and a range of Singaporean chief executives.

Since coming to power in May last year, Modi has made headlines for his global charm offensive. In meetings with Shinzo Abe, Vladimir Putin, Xi Jinping and Barack Obama, he's persistently drummed up India's open-for-business image in an attempt to seek capital for his ambitious campaigns, including Make in India, Digital India, Skill India, and Smart Cities.

While security topped the agenda in Malaysia, urban solutions and training will feature heavily on Modi's Singapore trip as part of his plan to build 100 Indian smart cities by 2022. The Southeast Asian powerhouse, famed for its efficient infrastructure, is already a key player in the program, having developed the masterplan for India's newest capital city, Amaravati, in Andhra Pradesh.

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Singapore is currently the second-largest source of foreign direct investment (FDI) into India after Mauritius, accounting for 13.9 percent of total inflow, according to official statistics. Meanwhile, Singapore is one of the top destinations for Indian investments, with outward FDI to Singapore increasing from $351 million in 2004-05 to $37.8 billion as of June this year.

The defense sector is expected to be in the spotlight as well.

"There is speculation from Indian journalists that Modi wants to upgrade the current defense policy dialogue between the two nations, which has so far occurred on a bureaucratic level," noted Mukherjee.

After beginning annual naval exercises in 1994, the two nations signed a Defense Cooperation Agreement in 2003 that allowed Singapore's army and air force to conduct training in India, resulting in regular intelligence exchanges. The two countries also hold an annual Defense Policy Dialogue, a forum for exchanging views on security-related issues.

Now, Modi may want to enhance that relationship by applying a more policy-driven focus to it, such as investing in education for military officers or exploring trade avenues instead of merely focusing on co-operation, according to Mukherjee.