6 Reasons Why Indian Startups Choose To Relocate To Singapore

Recently, a huge wave of Indian tech startups has hit the shores of Singapore. They have relocated or newly incorporated in Singapore. Flipkart, Milaap, Mobikon, Medialink are some of the Indian tech startups that have chosen to call Singapore their home. While some years back the Silicon Valley in the western hemisphere would have attracted such startups, Singapore is now considered the most ideal location. Here we explore the interesting and irresistible value proposition that Singapore offers for Indian startups.

1. Easy incorporation process

It is very easy to set up a company in Singapore. According to the Doing Business Report by the World Bank Group, the entire registration process takes an average of 2.5 days and an average of 3 steps, as against a regional average of slightly more than 34 days and an average of 7 steps for the incorporation procedure. The same report reveals that in India it takes 30 days and 13 steps to complete the company setting up procedure.

A company can be set up in Singapore with a paid-up capital of SGD $1. This is a major relief for the startups, which are often cash strapped. Starting a company in a first world country without such initial paid-up capital restraints is deemed a great advantage. More importantly Singapore allows 100% foreign ownership.

Most startups choose to set up a private limited company, this requires at least one company director who is ordinarily resident in Singapore. Hawksford can help in the process of incorporation by providing a resident director service. The entire incorporation procedure can be completed without the founder’s presence in Singapore. The incorporation process provides the startups with a legitimate legal identity and the founders and promoters are not held-up by reams of red tape.

2. Favourable Fund Raising Environment

Accessibility to capital is the top a priority. Singapore’s startup ecosystem is vibrant. Aside from government co-funding schemes such as, Early Stage Venture Fund (ESVF), SPRING SEEDS and risk sharing credit facilities, Singapore is also teeming with venture capitalists (VCs). Such VCs provide seed capital and Series A funding to tech startups that have promising business proposition. As of 2013, an estimated US$ 1 billion venture-capital investment has gone into tech startups in Singapore, which is a significant leap from less than US$30 million in 2011.

There is growing interest among venture capitalists in the Indian startups however the stringent regulatory requirements of the Reserve Bank of India and the regulatory authority for monetary affairs, requires a lot of paper work for transactions involving foreign exchange. This creates a challenge for small startups that are resource starved.

3. Friendly Tax Regime

The Singapore corporate tax rate is very attractive. Chargeable incomes are taxed at a flat rate of 17%. New startups, in their first three years of assessment, are fully exempted from tax on the first S$100,000 chargeable income and are subjected to only 8.5% on the next S$200,000 chargeable income. With a tax system that is very simple and straightforward, it is a key attraction for Indian startups that would otherwise pay 30% tax on their incomes if they were located in India.

Singapore follows a single tier taxation system. There is no tax on dividends and capital gains. Also the territorial taxation policy and the wide spanning network of Double Tax Avoidance (DTA) treaties that Singapore has is a great value proposition for startups when they expand their operations and markets.

4. Strong IP Protection laws

Protection of Intellectual Property (IP) is a key priority for startups. Singapore has strong IP protection Law in place which is strictly enforced. Startups value and viability depends on how well their inventions are protected. In the absence of laws and enforcement they become highly vulnerable. India also has IP protection in place, however the effectiveness and enforcement is often subjected to debate. According to the World Economic Forum’s study Singapore has the best IP protection in Asia and the world’s second best. The same study ranks India’s IP protection at 65th in the world.

Besides the IP protection law, Singapore also follows English Common Law and a strict rule of law prevails. The city-state is well known for its corruption free governance. There are highly acclaimed IP attorneys, patent agents and law firms in Singapore providing a comprehensive suite of services to the startups.

5. Robust Infrastructure

Singapore’s startup ecosystem is mature. There are several incubators, shared workspaces, accelerators, and venture capitalists – an ideal environment for the startups to sink roots and grow fast. The infrastructure is world class with well-designed buildings, banking, educational, healthcare, housing and recreational facilities. Singapore’s air connectivity and geographic location also aids the startup founders to travel around the globe promoting their ideas and products.

The local workforce is well trained and qualified. Hiring the desired international talent is also made possible with an immigration policy that supports meritorious candidates.

The Government strongly supports innovation spirit, with a vision to build a smart nation to overcome challenges of ageing and urban density unfolds opportunities and market for innovative startups.

6. Test Bedding Opportunity

Singapore is a cosmopolitan city-state. It is a microcosm of the world therefore serves as an effective test bed for startups to test launch and improvise their products and services. Singapore is also a very tech savvy and network ready nation. Many of the B2C tech products and services require a certain level of Internet readiness and receptivity to technology. Singapore provides an ideal test bed opportunity for such startups. The perception and potential of the product or service can be evaluated before taking them to a larger market.

Singapore meets and exceeds the needs of any startup. It is already gaining a strong reputation as a startup hub in the eastern hemisphere. More Indian startups with international market aspirations are bound to set-up shop in Singapore.