GIFT City wants to make a Paris or Dubai; its advantages and disadvantages as a financial center


It is a world-class financial and IT zone with tax advantages for businesses; but blackout rules, lack of nightlife and other social factors work against it

GIFT City claims to be a new “India’s financial and technological gateway to the world”. Photo: Website of the city of GIFT

Last week, Prime Minister Narendra Modi visited India’s first International Financial Services Center (IFSC) at Gujarat International Finance Tec-City (GIFT City) and also launched India International Bullion Exchange (IIBX), the first international exchange of country bullion.

The idea is to make it a global financial hub on the same level as Singapore, London, Tokyo, Shanghai, Paris and Dubai.

He also laid the foundation stone for the IFSCA Tower, the IFSCA headquarters building, in GIFT City.

“Conceived as an iconic structure, reflecting the growing importance and stature of GIFT-IFSC as a premier international financial center, the ‘IFSCA Tower’ is planned to have a built-up area of ​​3,00,000 square feet spread over 27 floors with best-in-class modern amenities and magnificent panoramic views,” said IFSC.


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“The IFSCA Tower was designed to be a platinum-rated green building with a highly efficient and durable structure. Estimated to be constructed at an estimated cost of ₹200 crore, when completed in 2024, the IFSCA Tower will emerge as a monumental edifice in GIFT City and symbolize the dreams and aspirations of a new and Aatma Nirbhar Bharat,” he said. -he adds.

According to the Prime Minister, “The vision of GIFT City is to create a world-class financial and IT zone for India to provide services not only to India but to the whole world.”

What is GIFT City?

GIFT City is a planned business district in Gujarat. It is located on the banks of the Sabarmati River connecting Ahmedabad and Gandhinagar. The city is planned on 886 acres of land with 62 million square feet of built-up area which includes office space, residential apartments, schools, hospitals, hotels, clubs, retail and various recreational facilities. .

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It has a “Walk to Work” concept and consists of a conducive multi-service SEZ (Special Economic Zone) and an exclusive domestic zone. GIFT City claims to be a new “India’s financial and technological gateway to the world”.

According to the city’s website, “GIFT City is an emerging global financial and IT services hub, the first of its kind in India, designed to be at or above world benchmark business districts. It is supported by state-of-the-art infrastructure encompassing all basic urban infrastructure elements as well as excellent external connectivity. Companies in financial services, technology and all other service sectors will be targeted as potential occupiers of the city. »

“GIFT City is changing the economic face of Gujarat and would keep India on the global map as a center of excellence in financial and IT/ITeS services,” he said.

GIFT City is equipped with some of the latest technology. From the latest public transport to automated waste collection to an efficient district cooling system, it has the best amenities available to its residents, says City management.

What is made to be the best

Several initiatives have been announced by GIFT City to make it a global financial center alongside Singapore, London, Tokyo, Shanghai, Paris and Dubai.

An Indian Regional Office (IRO) will be set up by the New Development Bank (NDB). IRO will be the face of NDB in the Indian subcontinent. It will gradually undertake an increasing range of NDB work, beginning with the identification and preparation of projects in India and other member countries. It will work closely with government, public and private sector agencies across the Indian subcontinent to identify projects with high development impact. The NDB has approved 20 projects in India totaling around $7.2 billion.

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The International Banking Units (IBUs) of three major multinational banks, namely Deutsche Bank AG, JP Morgan Chase Bank and MUFG Bank, were inaugurated.

“The presence of these major international banks not only symbolizes the growing stature of the city as an international financial center but also brings the wealth of global financial products, services and expertise to Indian shores,” the city said.

The expansion of the capacity of the Global In-house Center (GIC) of Bank of America (BoA), the first global bank to establish the GIC at GIFT-IFSC, was also announced. BoA decided to expand its operations in GIFT by hiring 1,500 new employees, in addition to its current workforce of approximately 1,000 in GIFT.

In GIFT, the International Trade Finance Services (ITFS) platforms of four entities have been operationalized in the IFSCA Regulatory Sandbox. Authorized under the IFSCA ITFS framework, these platforms have been established by RXIL Global IFSC Ltd., Vayana(IFSC)Private Ltd., MyndIFSC Private Ltd. and Kredx Ventures IFSC Private Ltd. These IFSCA-enabled ITFS platforms will create the world’s first regulator-initiated ecosystem to facilitate cross-border trade finance with the participation of buyers, sellers, financiers and enhancement institutions. credit.

The International Sustainable Development Platform (ISX) was launched to mobilize capital flows for companies, governments and institutions in India and other parts of the world to achieve their environmental and social goals. The platform will act as a one-stop destination for all sustainability products.

Fiscal advantages

The Government of Gujarat has announced tax incentives for IFSC units as well as SEZ (non-IFSC) units.

Among other tax incentives, IFSC units will enjoy 100% tax exemption for 10 consecutive years out of 15 years, an IFSC unit has the option to select any block of 10 out of 15 years .

For units in the SEZ, duty-free import/domestic purchases of goods for the development, operation and maintenance of the units, exemption from customs duties for all goods imported into the SEZ used for authorized operations, no GST on services received by unit in SEZ/IFSC and provided by SEZ/IFSC units to offshore clients, one-stop customs clearance for central and state level approvals, and other benefits.

In the city, Non-Resident Indians (NRIs) and foreign investors enjoy reduced tax rates on investments made in the IFSC.

Memoranda of understanding with foreign regulatory authorities

Memoranda of Understanding (MoU) have been exchanged by IFSCA with foreign regulatory authorities, namely the Monetary Authority of Singapore; Commission de Surveillance du Secteur Financier, Luxembourg; Qatar Financial Center Authority and Finansinspektionen, Sweden.

The MoUs will foster greater collaboration and partnerships between IFSCA and these regulatory authorities through, among other things, information exchange, sharing of best practices and capacity building.

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IFSCA has also exchanged a Memorandum of Understanding with the Department of Space (DoS), Government of India to unlock the huge convergence opportunity between FinTech and SpaceTech.

What is missing

Last December, the Gujarat government said investments worth ₹11,000 crore from 140 companies had been committed in GIFT City. Chief Secretary Pankaj Kumar had said, “Investments worth ₹11,000 crore from 140 companies have been committed in GIFT City. In addition, the average daily turnover on international exchanges within GIFT City exceeded $4 billion.

Despite this, some reports indicate that GIFT City has been slow to attract investment, ever since it was conceptualized in 2007 by Gujarat Chief Minister Modi. It was only after Modi became prime minister in 2014 that investment started flowing into GIFT City.

Earlier this year, Singapore High Commissioner Simon Wong said it was “difficult” for Singaporeans to live in GIFT City as it is “quite a ghost town” after working hours. He also said that “the statutes are very hard” and “it is difficult to build a financial center”, according to a Indian Express report.

“It takes decades to get to where we are. Some believe GIFT City’s development has been slow. However, in reality, you have to create the hardware and software to attract people organically. You can’t force people to come. If no profit is made, no one will come,” he said in the report.

According to experts, some of the reasons why domestic and foreign fintech companies do not turn to GIFT City are blackout rules, lack of nightlife and other social factors.

Last year, a media report said that the Gujarat government was planning to relax drinking rules in GIFT City for “evening social life”.

“Inside SEZs, the current notification only allows liquor licenses to residents. This is not in line with the dispensation in other centers in India or abroad. To create an evening social life, which is at least as good as in other centers, liquor bars with wine and dining facilities are needed in the SEZ area,” a senior official quoted by India time in December 2021.

GIFT management had written to the Superintendent of Prohibition and Excise asking for a relaxation of liquor laws in 2020, the report adds.


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