In another blow for Singapore companies doing business in India, telecommunications titan Singtel posted a quarterly loss of S$668 million.

Bharti Airtel, a telecommunications company headquartered in New Delhi, India, posted an exceptional provision of S$5.49 billion, according to the Business Times on Nov. 15.

As Singtel is the largest shareholder in Bharti Airtel, with an effective stake of 35 per cent, according to The Straits Times (ST), it was forced to shoulder a share of S$1.93 billion before tax.

Ruling by Supreme Court to pay up past dues

This was due to what Singtel group chief executive Chua Sock Koong described as an "unprecedented, surprise announcement" from the Indian Supreme Court.

In Oct. 24, the Supreme Court ordered telecom carriers, including Bharti Airtel, to pay the government as much as 920 billion rupees (S$17.4 billion) in past dues.

The telecom companies and the Indian government had disputed for many years over how revenue is calculated, and consequently, how much license and spectrum fees are owed.

According to Bloomberg, the Court upheld the method favoured by the government.

Singtel still expects profit, will continue to invest

If not for the Supreme Court's judgment, Singtel would have posted a net profit of about 4 per cent, year-on-year, according to BT.

In a briefing, Chua stated that Singtel still expects a profit for the full year, and it will continue to invest in areas such as core networks and the impending 5G wireless rollout.

The capital expenditure for the full year is expected to total S$2.1 billion.

Amaravati capital city project cancelled by state government

The Supreme Court ruling came just before a decision made by the state government of Andhra Pradesh (AP), a south-eastern state in India.

Chief Minister YS Jagan Mohan Reddy announced in a government order on Nov. 11 that he elected to close the Amaravati Capital City Start-Up Area Project.

According to a press release by Singapore's Ministry of Trade and Industry on Nov. 12, the closure was based on mutual consent between the AP government and the Singapore consortium involved in the project.

The consortium comprised the following companies:

• Ascendas Singbridge Pte Ltd, part of the CapitaLand Group.
• Sembcorp Development Ltd.

The consortium had been appointed by the AP government in 2017 to develop the Start-Up Area of its new capital city, Amaravati.

Back then, the Telugu Desam party was in power, with N. Chandrababu Naidu serving as Chief Minister.

However, after the general election held in April-May 2019, they were defeated by Reddy's YSR Congress Party.

Minister Iswaran: Singapore economic agencies will continue to pursue overseas opportunities

Minister-in-charge of Trade Relations S Iswaran said that companies recognised the risks when investing in overseas projects.

Although the closure of the Amaravati project cost the Singapore consortium "a few million dollars", they remained keen to invest in India because of the market's "size and potential".

According to Iswaran, Singapore's economic agencies will continue to help local companies internationalise by exploring opportunities in India and other markets.

RCEP pullout

However, the task will be made harder after the national Indian government decided to pull out of the Regional Comprehensive Economic Partnership (RCEP).

RCEP is a massive trade deal that would have encompassed 30 per cent of global GDP, and half of the world's population.

The deal would have linked up economic heavyweights in the Asia-Pacific like China, Japan, South Korea, India, Australia and New Zealand -- as well as the ASEAN member countries, including Singapore.

On Nov. 4, CNA quoted Prime Minister Narendra Modi as saying that RCEP did not address India's "outstanding issues and concerns".

Therefore, it was "not possible" for India to join RCEP.

Domestic political concerns over RCEP

The news came as a hammer blow during the ASEAN summit in Bangkok, Thailand.

Previously on Nov. 3, Prime Minister Lee Hsien Loong called on ASEAN and India to redouble efforts at economic integration.

However, Modi's concern appeared to lie with his domestic political support.

ST reported on Nov. 3 that the opposition Indian National Congress, led by Sonia Gandhi, had been whipping up resistance to RCEP.

Gandhi blasted the deal and claimed that India would become a "dumping ground for products, including agricultural products from foreign countries".

Despite the personal rapport that Modi and President Xi Jinping of China have tried to build in recent months, India's pullout may have stemmed from concerns over the impact of cheaply made Chinese goods, according to CNA.

India's trade deficit with China already stands at S$72.1 billion.

Moving forward in India

Despite these setbacks, Singapore companies cannot afford to ignore the opportunities afforded by the Indian market.

According to Enterprise Singapore, India boasts a huge domestic market of 1.3 billion potential customers, along with robust GDP growth and an investor-friendly climate encouraged by Modi.

Singapore-India trade grew "exponentially" to S$26.4 billion in 2018, according to a June 2019 press release from MTI.

Singapore also became India's largest investor in FY2018.

As recently as October 2019, Iswaran announced that Singapore tech companies can access India's innovation ecosystem through the launch of the Global Innovation Alliance network.

CECA helps Singapore

Speaking to reporters on Nov. 9, Minister for Trade and Industry Chan Chun Sing defended Singapore's track record in pursuing free trade agreements (FTA).

Focusing on the Singapore-India Comprehensive Economic Cooperation Agreement, better known as CECA, Chan said that the number of high-skilled jobs for Singaporeans grew by 400,000 since it was signed in 2005.

CECA had come under criticism from certain Singaporeans who erroneously believe that it gives Indian nationals unconditional access to immigrate to Singapore.

Dismissing these claims, ST quoted Chan as saying: "Anyone applying for Singapore citizenship must qualify according to our existing criteria. All our FTAs, including CECA, place no obligations on Singapore with regard to immigration."

Top image by Himanshu Bhatt/NurPhoto via Getty Images.