President of Singapore Tharman Shanmugaratnam concluded a four-day state visit to India on 18 January 2025. The first Indian tour by a Singaporean president in a decade, it commemorated the 60th anniversary of India and Singapore establishing bilateral ties. This high-level visit follows the one made by Indian Prime Minister Narendra Modi to Singapore in September 2024, when the two countries elevated ties to a Comprehensive Strategic Partnership (CSP).

India and Singapore have maintained amicable relations with strong economic and trade ties over the years. Singapore has been one of India’s foremost trading partners and its top Foreign Direct Investment (FDI) contributor. As of 2023-24, Singapore was India’s largest trade partner in ASEAN, with petroleum products, electronic machinery, coal, and ships being the most traded items. The two countries also have a sound defence partnership which manifests through joint drills, exercises, regular ministerial dialogues, and association in equipment manufacturing.

2024 onwards New Delhi and Singapore have seen a still further uptick in bilateral ties. From a Singaporean perspective, this growing partnership results from a combination of national and regional considerations that reflect its evolving strategic interests. What are the specific factors driving this robustness?

Bilateral Incentives

India-Singapore ties are primarily based on trade, commerce, and people-to-people linkages. In 2023-24, bilateral trade reached around US$ 35.62 billion. The annual compound growth rate of total trading volume since 2019-20 has been around 10.75 per cent, with the balance in Singapore’s favour.

This relationship has been facilitated by the India-Singapore Comprehensive Economic Cooperation Agreement (CECA), a Free Trade Agreement signed in 2005. The CECA reduces tariffs, protects FDI, and boosts market access. Additionally, it enhances cooperation in areas like knowledge-sharing, education, and skill-building, while also easing visa restrictions and recognising qualifications to allow easier exchange of professional talent. The relationship recently progressed to a CSP following CECA’s success. This endeavour reaffirms existing collaborations but also opens doors to new and emerging areas like healthcare, semiconductors, digital technologies, and sustainability. There is also hope that the CSP can help address the problem of reduced FDI flow into India. Although Singapore is the top contributor, its overall investments have seen sharp decline in the past year.

Collaborative skill development and exchange of skilled labour further strengthens bilateral relations between India and Singapore. Singapore has long depended on foreign workers due to its small population size and shortage of native manpower. As of 2024, around 6,50,00 Indians were living in Singapore. Indians are a major source of the low wage migrant workforce in Singapore, with Indian Employment Pass holders nearly doubling between 2005 and 2021. This workforce also contributes to the rising demand of finance and tech-centric jobs at multinational companies that have set up shop in Singapore. Without this labour, the Singaporean economy, which depends on multinational corporations for 73 per cent of its corporate tax, would take a significant hit. This is why technical education and skill development are important areas of collaboration. In fact Singapore has associated with several Indian states for such initiatives, such as setting up the North-East Skill Centre in Guwahati, Assam, and the World Skill Centre in Bhubaneswar, Odisha. These efforts allow Singapore to capitalise on India’s demographic dividend by making people more employable. For example, the winners of the Singapore India Hackathon were incentivised by potential job opportunities at the Singaporean DSB Bank.

While advantageous to its economy, the rise in foreign workers has also caused strains within Singapore. Singaporean natives have grown to resent foreigners for allegedly stealing professional opportunities. Indians face racial and xenophobic abuse in Singapore, where ‘CECA’ is used as a slur for Indian workers. In the absence of punitive action, the discrimination has not stemmed. The Singaporean government has however made statements saying that this nature of abuse won’t be tolerated, that economic agreements, including the CECA, don’t grant favour for employment. Singapore’s ongoing investments in Indian skill-building and the induction of Indians into its workforce underscore how vital this sector is to its economy. On the flipside, local hostility towards foreign workers from India continues to be a significant concern, though the Indian government is yet to raise the issue with Singaporean counterparts.

Regional Drivers

As a small country, Singapore’s success and stability depend on its partnerships and ability to adapt to major power competition. Despite Singapore’s longstanding and meaningful relations with both the US and China as well as deft attempts to walk the foreign policy tightrope, some problems persist. Regional flux has manifested in the form of protectionist trade practices, which create exclusion and hurt Southeast Asian economies. It has also increased competition in areas of key and emerging technologies. Always a proponent of regional collaboration, Singapore has highlighted the need to create diverse multilateral partnerships so as to not get caught in geopolitical crossfire.

Singapore has adapted to the flux created by major power competition by diversifying and strengthening other relationships. In this light, expanding areas of collaboration with India is a strategic move to create dependable ecosystems in the region. For example, the India-Singapore semiconductor deal tries to bridge supply chain gaps created post the COVID-19 pandemic and to insulate from the impacts of China's stance against Taiwan. This not only adjusts to regional changes but also creates new opportunities by giving Singapore greater market access. Other areas of collaboration include setting up a green energy corridor to cooperate on critical and emerging technologies. This will achieve India and Singapore’s joint goal of sustainable development, and facilitate greater visibility for Singapore as a regional lead in clean technology.

As a strong supporter of multilateralism, Singapore had thrown its weight behind ASEAN’s Regional Comprehensive Economic Partnership (RCEP). India’s sudden decision to opt out of RCEP negotiations in 2019 was thus met with concern. This concern was reportedly exacerbated when India was perceived as repositioning itself away from ASEAN. Singapore’s strategic position as a gateway to Southeast Asia plays a key role in ensuring ASEAN remains a priority for India. Given the unceasing crisis in Myanmar, this partnership as well as India’s active involvement in ASEAN become even more urgent. New Delhi and Singapore have significant investments and economic interests in Myanmar and share a common goal of maintaining peace in the ASEAN region. India’s participation is needed for developing a comprehensive and durable solution to the crisis, especially when ASEAN’s 5-point consensus has failed to make a difference. India’s Ministry of External Affairs confirmed that Myanmar was a topic of discussion during this presidential visit.

Conclusion

In their 60 years of partnership India and Singapore have maintained steadfast relations. The past year has seen a positive escalation in the relationship, with a deepening of ties through a blend of bilateral and regional strategic considerations. Bilaterally, CECA has helped further bolster trade and economic linkages and opened new pathways to cooperation, such as digital technologies. While racial tensions are an active concern, the high volume of labour and expertise flowing into Singapore also emphasises a critical interdependency. Regionally, Singapore's efforts to diversify partnerships due to major power competition further drive its engagement with India. This new phase in their partnership is not just to foster mutual growth and stability but is an acknowledgement of shifting global dynamics and an effort to navigate them jointly.

Fiona Raval is Researcher with IPCS’ South East Asia Research Programme (SEARP).