India offers location savings due to lower cost of rentals, man-hour cost and overall standard of living owing to being an Emerging economy. This attracts Companies outside India to set up operations in India. However, considering that, a major aspect to consider while setting up a company in India is foreign exchange fluctuations, tax rates applicable, other statutory costs and ease of doing business.

A detailed analysis must be carried out to weigh the prospective gains from location savings vis-à-vis prospective increase in costs due to higher rates of taxes, other costs, foreign exchange fluctuations and ease of doing business.

While India has significantly improved ranking in ease of doing business, Singapore still remains the top destination with respect to Ease of doing business, along with New Zealand.

A comparison of tax rates of Singapore at 17 percent with India at 30 percent significantly points towards better tax advantages of setting up Asia Headquarters in Singapore. Man-hour costs, rental costs, etc. point towards India being 20 percent cheaper, however, it still may differ since Top cities in India would end up costing almost same or even higher in some parts.

Due consideration must be given to operations to be carried out in Singapore vis-à-vis scope of operations in India.

Aspects to be considered in such a scenario include, but not limited to, Transfer Pricing, Double tax avoidance, Capital Gains, obtaining of license, approval for employment pass, cost of setting up and maintaining a company in each geography, nature of operations, Functions, Assets and Risks associated with intended operations of each entity.

Careful and detailed planning is required before setting up a company in Singapore after considering aspects mentioned above, along with those specific to the business and complexities born out of company specific facts.