Abstract
Singapore has become a magnet for Indian startups seeking a supportive business environment, robust infrastructure, and financial advantages. With over 8,000 Indian companies registering in Singapore since 2000, this trend showcases the city-state’s growing appeal as a global hub for innovation and entrepreneurship. This blog delves into the key reasons Indian startups are incorporating in Singapore, exploring its business-friendly policies, tax benefits, intellectual property protection, and vibrant investor ecosystem. We’ll also highlight prominent examples of Indian startups making this strategic move.
Introduction
The decision to register a business overseas is strategic, especially for Indian startups aiming for global scalability and operational efficiency. Singapore, often lauded for its robust legal framework, low corruption levels, and strategic location, has become a go-to destination. For Indian entrepreneurs facing challenges such as bureaucratic red tape and high taxes in India, Singapore offers an attractive alternative. With its competitive tax policies, extensive investor networks, and strong intellectual property protection, Singapore is paving the way for startups to thrive in an increasingly competitive global market.
Why Indian Startups Prefer Singapore
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1. Strategic Location and Connectivity
Singapore’s position at the crossroads of global trade routes makes it a gateway to Southeast Asia’s burgeoning markets. Its world-class port and airport facilities ensure seamless connectivity, which is a boon for startups involved in trade, logistics, and e-commerce.
2. Attractive Tax System
Singapore’s flat corporate tax rate of 17% is significantly lower than India’s 30%. Additionally:
- No capital gains tax: Unlike India’s 15-20% capital gains tax, Singapore offers a 0% rate.
- No dividend tax: In Singapore, dividends are tax-free, unlike India’s taxed dividends.
- Simplified GST: Singapore’s GST is capped at 9%, compared to India’s 5-28%.
These policies help startups retain more earnings, fueling growth and innovation.
3. Business-Friendly Environment
- Singapore ranks 2nd in the World Bank’s Ease of Doing Business 2020 report, compared to India’s 63rd position.
- Its government actively supports startups through initiatives like Startup SG and Spring SEEDs, providing grants and equity support.
4. Strong Intellectual Property Protection
Singapore ranks 11th in the 2023 International IP Index, reflecting its robust and well-enforced IP laws, making it a secure destination for innovation-driven startups. Its streamlined registration process and effective enforcement mechanisms ensure startups can protect their patents, trademarks, and copyrights efficiently.
In contrast, India ranks 42nd on the same index. While India has made progress with initiatives like the National IPR Policy, challenges such as lengthy registration timelines and inconsistent enforcement persist. This disparity makes Singapore a preferred choice for startups prioritizing IP security and seeking global scalability.
5. Thriving Investor Ecosystem
Singapore’s investor-friendly policies attract VCs, angel investors, and sovereign wealth funds. Initiatives like the Angel Investors Tax Incentive which allows angel investors to enjoy a tax break of up to 50%, this initiative makes it easy for investors to confidently invest in early-stage startups and grants like the Productivity and Innovation Credit ensure startups have access to capital while reducing tax burdens. These include the Capabilities Development Grant (CDG), which can cover up to 70% of qualifying project costs, the Productivity and Innovation Credit (PIC), which can offer businesses a 400% tax break or a comparable payout.
Indian Startups That Shifted to Singapore
According to the Indian High Commission in Singapore, more than 9000 Indian companies are registered in the island nation. The top Indian firms, including Reliance Industries, AdGRoup, Tata Group, Mahindra & Mahindra, and IT giants such as Infosys and Wipro have operation bases in Singapore.
Several Indian startups have incorporated in Singapore to leverage its advantages. Notable examples include:
- Flipkart: Registered as Flipkart Pvt. Ltd. in Singapore, it became a global e-commerce giant with substantial foreign investments.
- InMobi: Founded in India but headquartered in Singapore, it excels in mobile advertising and tech solutions.
- Milaap: A crowdfunding platform supporting social causes, incorporated in Singapore in 2011.
- Capillary Technologies: Transitioned its headquarters from Kolkata to Singapore in 2012, citing operational advantages.
- Zilingo: Co-founded by Ankiti Bose, Zilingo is a Singapore-registered startup revolutionizing the fashion supply chain.
- UrbanClap (Urban Company): Recently shifted its holding structure to Singapore to explore global expansion opportunities.
Recent Examples of Startups Incorporating in Singapore
- Zilingo: A fashion-tech startup co-founded by Ankiti Bose, focusing on streamlining the fashion supply chain.
- Licious: An Indian D2C meat brand exploring global markets with Singapore as its operational base.
- Nium (formerly Instarem): A fintech company originally from India, now a global payment solutions provider headquartered in Singapore.
Incorporating in Singapore not only opens doors to global opportunities but also fosters a culture of innovation and efficiency. With the continued growth of Singapore as a startup hub, Indian entrepreneurs have much to gain by leveraging its advantages.
Key Takeaways for Indian Startups
- Tax Efficiency: Singapore’s favorable tax regime significantly reduces operational costs.
- Ease of Foreign Investments: Simplified regulations encourage international investors to participate.
- Global Connectivity: A strategic base for accessing Southeast Asian and global markets.
- Innovation-Friendly Ecosystem: Grants and initiatives provide critical support at various stages of growth.
- IP Security: Strong intellectual property laws foster confidence among tech-driven startups.
Conclusion
For Indian startups aiming for global success, Singapore offers a perfect blend of strategic advantages and growth opportunities. Its competitive tax structure, robust legal system, and thriving startup ecosystem make it an ideal destination for businesses seeking to transcend geographical boundaries. As more Indian companies follow this trend, it underscores the importance of creating a similarly conducive environment within India to retain its entrepreneurial talent.
We have also made a video on company formation in Thailand-
