Singapore's Minister for Trade and Industry (Industry) S. Iswaran said Singapore's involvement in the building of Amaravati, the new capital city of Andhra Pradesh, would contribute significantly to bilateral relations while helping Singapore expand its presence in India.
Mr Iswaran, who ended his visit to India yesterday, had on Monday witnessed the award of a letter to a Singapore consortium of Ascendas-Singbridge and Sembcorp Development to develop the commercial hub of Amaravati.
"In terms of scale, it (Amaravati) is obviously a very significant project and therefore, in that regard alone, it is a fairly significant bilateral effort between India and Singapore," Mr Iswaran told the Singapore media.
He said the project gave Singapore firms not only an opportunity to come directly into the development but also to understand the Indian environment.
"Specifically, Indian Prime Minister Narendra Modi's objective, among other things, is to raise urban development and planning capacity. I think on those fronts, this is certainly a project that has significant contribution to make towards bilateral relations and in terms of scale, the largest by far," he said.
"Having said that, we do want to encourage our businesses to explore opportunities across India because there are different states with different opportunities."
India and Singapore have good political and economic ties, strengthened by a Comprehensive Economic Cooperation Agreement signed in 2005 that saw bilateral trade grow from $16.6 billion in 2005 to $22 billion last year.
Singapore was the second-largest investor in India last year. But the Singapore Government is keen to see firms take further advantage of opportunities in India, whose economy grew by 7 per cent last year.
Mr Iswaran was at the official opening yesterday of Food Empire subsidiary company Indus Coffee's instant coffee manufacturing facility. He noted that the plant, which does not sell locally but exports to Russia, Malaysia and other countries, was one example of how businesses could operate in India.
Yet, apprehension remains about doing business in India despite efforts by its government to improve the business environment, including introducing a goods and services tax from July. India ranks low in terms of ease of doing business because of lengthy regulatory processes and bureaucratic delays.
Even the Amaravati project saw a two-year delay in choosing the master developer after firms went to court over the bidding process.
Said Mr Iswaran: "The Indian economy, it has its challenges and I think our businesses are aware of them, whether in terms of regulation or operating environment... At the same time, it's an economy that offers significant opportunities for our businesses."
As part of the visit, IE Singapore led a 20-member delegation to explore business collaborations in Andhra Pradesh.
Mr Lam Joon Khoi, secretary-general of the Singapore Manufacturing Federation, said: "I think apprehension will definitely be there... (but) with big companies taking the lead... that will add to confidence-building on investing in India."