India and Singapore will consider an open skies policy between the two countries, having signed a milestone economic cooperation pact covering a wide range of areas, Commerce Minister Kamal Nath said Thursday.


Briefing reporters after talks with a high-level delegation from Singapore here, Kamal Nath said the issue of an open skies pact was discussed Wednesday by Prime Minister Manmohan Singh and his counterpart from Singapore, Lee Hsien Loong.

"The respective civil aviation ministries will now hold discussions next month to take the issue forward," the commerce minister said, adding that an aviation pact was a logical extension of the far-reaching economic pact inked Wednesday.

The pact, which comes into force from Aug 1, is an integrated package covering goods, services, investments, mutual recognition of standards, customs, media, science, technology, intellectual property and education, among other issues.

Kamal Nath said the concerns of Indian industry over possible dumping of goods from third countries using the comprehensive cooperation agreement had been well addressed by the two sides with stringent rules of origin.

"One of the concerns has been stitch trade. Singapore has addressed our concerns and has built it into the agreement which we have signed," he said, adding that the goods that form a part of the pact should not affect the Indian industry.

Singapore's Commerce and Industry Minister Lim Hng Kiang, who also answered queries from the media said his country, too, viewed Wednesday's agreement as a milestone and looked forward to much greater economic engagement with India.

He particularly mentioned the mutual recognition of around 120 professions for grant of visas and said Singapore will greatly benefit from the flow of talent from India.

Lim also invited Indian industry to use his country as a base not only for exports into Southeast Asia, but also as an investment destination. Likewise, he envisaged greater investment by Singaporean companies in India.

Referring to the agreement on financial services built into the comprehensive pact, the visiting commerce minister said three Indian banks would be treated on par with their Singaporean counterparts when they set up shop there.

"We are waiting for the applications of Indian banks," he said, adding that they would be treated like any other bank in his country as long as they adhere to the prudential norms of the country's monetary authority.

India has already agreed to national treatment for three banks from Singapore - DBS Holdings, Overseas Chinese Banking Corporation and United Overseas Bank - in terms of branches, places of operation and prudential requirements.

"Issues like priority sector lending will not apply to these foreign banks," Kamal Nath added.