Why Indian Entrepreneurs are Shifting their Bases to Singapore?
The low tax regimes are attracting investors from the heavily taxed regimes. Thousands of Indian entrepreneurs have left in search of the better opportunities.
Recently, a news article on the internet gave the number of Indian millionaires moving out to places like USA, UK, France, and Singapore over the lack of security and other concerns. It highlighted that as many as 61,000 millionaires left India in the last 14 years. A majority of them have gone to Singapore to start a business.
- What is driving these motivated individuals away from their home territory?
- What is so intimidating that these individuals are turning their backs to the consumer-base of 1.2 billion consumers?
- Are there more inviting marketplaces for them?
- Is the Indian Government taking note of the fact?
Bureaucratic Red Tape
One of the major issues faced by these individuals is the difficulties that they face with the red tape. The Permit Raj, the term coined to stress the number of permits one needs to acquire to start a business in India is proving an obstacle course for the Indian entrepreneurs.
India inherited British legal system designed to discourage the native industry. The bureaucrats, instead of making it simple for the homegrown entrepreneurs, have further complicated the matters by piling it up with the permits and licenses.
Today, an entrepreneur is lucky to go through the barrier in 30 days, if all goes well. It is no wonder that the latest World Bank report 2015, covering 189 economies across the world places India at 142th position. On the other hand, Singapore occupied the top position in the same report.
They are updating the processes and procedures to make it easy for the entrepreneurs to incorporate their companies in India. The question is, “Are these measures at par with what the Singapore business environment has to offer Indian entrepreneurs?”
The level of corruption in India is simply staggering. A study conducted in 2005, reports that 62% Indians have paid the bribes or used influence to get the job done in the public offices. Transparency International’s Corruption Perceptions Index, 2015, ranks India at 85th out of 175 countries. On the other hand, Singapore stands out as a country with the least corruption. Is it what troubling the Indian entrepreneurs and investors?
Small and Medium Enterprises (SMEs)
Singapore has understood the importance of having a flourishing SMEs sector to keep the unemployment rate down. So, it has formulated strategies to encourage business owners to form a company in Singapore. India has also implemented similar strategies, however, raising funds or the capital has always been a big problem for the new business owners.
The corruption and influence plays a great part in raising funds. A project file moves from one table to another only if money changes hands. The initiative was there but with the lack of proper follow-up, the SME sector in India is facing grave problems.
Singapore supports its start-up with various tax benefits, incentive, and exemption schemes. Even, its established companies qualify for 30% of corporate income tax rebate. The lower Singapore personal and corporate income tax rates are indeed beneficial to the entrepreneurs and individuals.
When you go through the data, you will realize that under present circumstances it is hard to stop Indians from shifting to Singapore. The Indian government must do more than just offering tax benefits. It must do something drastic about the corrupted system and bureaucrats.