Why is Singapore such an important source of Foreign Direct Investment (FDI) into India, and what benefits does investing in India through Singapore yield to foreign investors?

Singapore accounted for almost 25% of India’s total Foreign Direct Investment (FDI) in 2013-14. This large share is explained by a provision of Singapore Double Tax Agreement (DTA) with India – the Limitation of Benefit (LoB). The LoB provides incentives and increased legal legitimacy for foreign investors to route Indian FDI through Singapore. Besides the LoB, Singapore’s position as a gateway to the rest of ASEAN, its strong legal system, and friendly incorporation regulations provide added incentives to invest in India through Singapore.