PRIME MINISTER’S VISIT TO SINGAPORE

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Context:

The Prime Minister of India's visit to Singapore aims at strengthening collaboration in the semiconductor sector.

Details

• The Indian Prime Minister's recent visit to Singapore is an important milestone in India's ambition to become a major player in the global semiconductor industry.
• Semiconductors are the tiny chips that power everything from smartphones to advanced weapon systems.
• They are the critical components of modern economies and technological developments.
• A Memorandum of Understanding (MoU) was signed between both the leaders to strengthen partnerships in the semiconductor sector. 
• The MoU represents a strategic move by India to enhance its semiconductor industry which is important for various high-tech sectors.

Success Story of Singapore in the Semiconductor Sector

• During the 1970s, the Prime Minister of Singapore started taking initiatives to attract semiconductor industries. 
• By the early 1980s, the semiconductor industry had become an integral part of Singapore's economy, contributing about 7% of its Gross National Product (GNP).
• Currently, Singapore produces about 10% of the world's semiconductor output.
• The strategic location of Singapore, its infrastructure and a well-educated skilled workforce have made it a hub for semiconductor manufacturing and innovation. 

India's semiconductor ambitions India launched the Semiconductor Mission in 2021 intending to create a comprehensive semiconductor ecosystem in the country.  India Semiconductor Mission is an ambitious 76,000 crore initiative scheme, which seeks to encourage semiconductor manufacturing in India.

Lesson for India from the Singapore’s Success in the Semiconductor Industry

• Singapore has developed a specialised wafer fabrication park that provided the necessary infrastructure for semiconductor manufacturing.

• • • Universities in Singapore played an important role in developing talented skilled workers for the semiconductor industry.

• They offered specialised programs in microelectronics and collaborated with industry leaders on research and development around the globe. 

• A stable business ecosystem and strategic location are critical to attract Semiconductor firms. 

Challenges and opportunities

• High production costs and limited resources in Singapore have led some companies to move operations to more cost-effective locations.
• This presents an opportunity for India to attract semiconductor companies that are looking to diversify their production base.
• India's cost advantages in labour and land could be attractive to the semiconductor industry for expansion.

About Singapore It is an Island nation in South Asia.  It borders the Strait of Malacca and the South China Sea.  It consists of one main island and 63 smaller islands. Despite having no natural resources, Singapore has a strong economy based on international trade and globalisation.  It is a hub for aviation, finance, and shipping.  It has a tropical climate with uniform temperatures and heavy rainfall.

About India-Singapore Relations

• India was one of the first countries to recognize Singapore after its independence in 1965.
• In 2015, the bilateral relationship between India and Singapore was upgraded to a strategic partnership.
• In 2023, the UPI-PayNow cross-border payment linkage was launched between India and Singapore.
• The First India Singapore Ministerial Roundtable was held in 2022. It focused on digital connectivity, green economy and skill development.
• The second India-Singapore Ministerial Roundtable was organised in 2024, to strengthen cooperation in manufacturing and connectivity. 

Economic Relation

• Singapore is India's largest trade partner within ASEAN.

• • • In 2023-24, Singapore was the largest source of foreign direct investment (FDI) for India, contributing around $11.7 billion. 

• Bilateral trade has increased from $6.7 billion in 2004-05 to $35.6 billion in 2023-24. 

Scientific and Technological Corporation

• Indian Space and Research Organization (ISRO) has launched multiple satellites of Singapore, including their first indigenously built micro-satellite. 
• India and Singapore have conducted workshops on digital health and medical technologies and Co-hosted the ASEAN India Women's Scientists conclave in 2024. 

Cultural Relation

• The Indian community in Singapore consists of around 9.1% of the resident population and contributes actively to various sectors such as finance, IT and construction. 
• Tamil is one of Singapore's official languages and Indian languages such as Hindi, Gujarati, Urdu, Bengali and Punjabi are also taught in schools. 

Challenges in India-Singapore relations

• Competition between Indian and Singapore firms, especially in sectors like financial services and technology can create friction. 
• Indian companies face bureaucratic red tape in Singapore, while Singapore firms struggle with India's complex regulatory environment, especially regarding taxation and business registration. 
• Integrating India's rapidly growing fintech sector with Singapore's more developed fintech sector can be challenging. 
• Collaboration in high-tech industries such as artificial intelligence, quantum computing and cyber security is still in the initial stage. 

• • • A lack of joint research and development in advanced technologies could hinder long-term strategic gains. 
• Labour migration policies in Singapore sometimes pose challenges for Indian professionals.

Way Forward

• Strengthen India Singapore Comprehensive Economic Cooperation Agreement (CECA) by addressing sector-specific challenges.
  • • This will create a simplified process for business approvals and easing cross-border investment flows.
• Both nations should establish deeper cooperation in emerging technologies like artificial intelligence, blockchain and quantum computing, through joint research and development. 
• India and Singapore can collaborate more closely on cybersecurity, maritime security and counterterrorism. 
  • • Singapore's advanced cyber defence infrastructure and India's growing cybersecurity expertise can complement each other in safeguarding critical infrastructures. 
• Promoting cultural exchange programs, student exchanges, and bilateral tourism initiatives can strengthen people-to-people contact. 
• Both countries can work together in regional platforms like ASEAN and the International Solar Alliance to address global challenges such as climate change, renewable energy and sustainable development.
• Expanding cooperation in green energy through projects focused on green hydrogen, renewable energy and sustainable Urban Development will benefit both nations.
• Establishing more skill development centres with Singapore's expertise will help India to develop a skilled workforce.
• Developing infrastructure and connectivity projects to enhance maritime and air connectivity will help both nations.
• Encouraging joint ventures and public-private partnerships in sectors like advanced manufacturing, biotechnology and healthcare technologies will boost economic cooperation and also create job opportunities in both countries. 

Must Read Articles: 

Cabinet Approval For Semiconductor Plants In India

Source: 

Indian Express

Wikipedia

High Commission of India in Singapore

PRACTICE QUESTION Q. How could collaboration with Singapore help India in accelerating its semiconductor industry, and what lessons can India learn from Singapore's success in this sector?