New Delhi: India and Singapore have taken a major step forward in cementing their bilateral ties by signing a ''comprehensive economic cooperation agreement'' (CECA). Singapore has also conveyed its support for India''s candidature as a permanent member of the UN Security Council.

The CECA was signed by prime ministers Manmohan Singh and Lee Hsien Loong, who is visiting India. The 739-page agreement is an integrated package liberalising trade in goods and services and seeks to substantially bolster trade and investment.

The agreement has pacts for cooperation in customs, science and technology, education, e-commerce, intellectual property and media. The two sides have also signed a ''bilateral investment protection agreement'', a double taxation avoidance agreement, with additional safeguards to avoid misuse.

According to the pact, India will allow three major Singapore banks to set up wholly-owned subsidiaries in the country. The three banks - DBS holdings, Overseas Chinese Banking Corporation and United Overseas Bank - will be treated at par with Indian banks for opening branches.

Indian banks already operating in Singapore will get full banking status which means they will be allowed electronic fund transfer, clearance and use of local ATMs.

The signing of the CECA paves the way for the two countries to enhance their two-way trade to over $10 billion by the end of 2005-06 and to $50 billion by 2010 — up from below . $8 billion at present — says The Associated Chambers of Commerce and Industry of India (Assocham) in a report, India-Singapore Comprehensive Economic Co-operation Agreement: A Pathfinder for the India-Asean FTA. Releasing the report Mahendra K. Sanghi, president, Assocham, said Singapore''s cumulative investment in India of around $3 billion, would go up to $5 billion by 2010 and to $10 billion by 2015. The thrust areas of Singapore''s investment in India would be airports, ports and urban infrastructure he added.

According to the study, CECA will help Indian businesses leverage Singapore''s strengths in finance, manufacturing and marketing and achieve greater competitiveness in IT through closer ties with its advanced electronic industry.

"More than 300 Indian IT companies have already set up software development operations in Singapore and there are about 1,500 Indian companies which have bases in Singapore; every year around 150 new companies set up their operations,'''' said Sanghi.

As a trading partner of India, Singapore accounted for, on an average, 3.0 per cent of India''s total exports and 2.6 per cent of India''s total imports during the five-year period from 2000-01 to 2004-05. India accounted for, on an average, 2.2 per cent and 0.9 per cent of Singapore''s total exports and total imports, respectively, from 1999 to 2003.