India aims to launch rupee bonds in Singapore

Prime Minister Modi marks ‘restored credibility’ of India’s economy by unveiling finance plan for ambitious public works scheme

Indian Prime Minister Narendra Modi plans to fund a major programme of infrastructure works in his country by issuing rupee bonds in Singapore, he has announced.

The proposal was unveiled during Modi’s keynote address to the India-Singapore Economic Convention on 24 November – an opportunity for the nations to celebrate their deepening economic relationship.

Modi told the Singapore gathering of private- and public-sector executives that, in the 18 months since they took office, he and his cabinet have “successfully restored the credibility of India in the eyes of global players”.

As soon as his government started work, he said, it immediately began to liberalise the country’s foreign direct investment (FDI) regime.

“We allowed 100% FDI in railways and enhanced the FDI limit to 49% in defence and insurance,” Modi pointed out. “In that spirit, we are fine-tuning the procedures also.”

Modi outlined a set of “very dynamic steps” that his administration took in early November to open up India’s economy even further for FDI:

• For most business sectors, FDI clearances are now automatic;
• Most sectors can now freely absorb FDI into brownfield projects, such as roads and construction, in addition to greenfield schemes; and
• Entry and exit conditions for FDI players have been greatly relaxed.

On the bonds plan, which is set to fund dozens of ‘smart cities’ as well as several road and rail facilities, Modi explained: “With tight control over expenditure, we have greatly increased capital investment by the public sector. To leverage this, we are setting up National Investment and Infrastructure Fund.

“We are also coming up with tax-free infrastructure bonds, with a view to broadening the corporate bond market. This will also provide long-term finance for infrastructure. For infrastructure, we have also decided to launch rupee bonds in some countries [and are] eager to work with Singapore in this regard.”

Singapore, Modi stressed, is an “important and valuable friend of India in our global outlook”. He added: “A large Indian diaspora is enriching the life and work environment of Singapore. In recent years, economic engagement has been a key driver of our relationship.

“Singapore has emerged as the second-largest source of FDI into India. Outward Indian FDI to Singapore has also increased in recent times. Singapore is now one of the top destinations for Indian investments.

“I look forward to working with Singapore in a bigger way.”