GIFT City: Transforming India into a Financial Hub After Dubai & Singapore – Explained
Financial hubs like UAE and Singapore are on the top lists of the startups when it comes to investment. Undoubtedly, these countries always offered the startups more than they could ask. These countries offer comparatively low tax rates, comprehensive financial management, immediate citizenship, and many perk benefits including financial counselling that attract the Indian startups to go after them.
All these benefits were never before provided to the startups in India, that’s why the Indian startups have always been headed their way to abroad countries.
What do these countries really offer?
A number of startups have fallen for the offers of foreign countries and registered themselves outside of India. One of those startups include Meesho payments, Car24, Inmobi, Glance, Flipkart and such more.
One of the major reasons for Indian startup founders to make their ways to Dubai and Singapore is because the taxes that a startup may pose while setting up a business in India are effectively lower, especially in Dubai.
On the other hand, the excellent cost-cutting environment, infrastructure, financial services, and growing trade in Singapore is what steals Indian startups attention.
But, just when India decided to flip the perspective of startups, Narendra Modi – the prime minister of India came up with the global financial hub of India by introducing the GIFT city in 2007, which was his visionary project being the chief minister of Gujarat.
From 2007 to 2012, after a deep research study on the execution of this project, finally he launched it and by that the first phase of its basic development of construction and infrastructure was completed. This project is now under-construction in Gujarat and as per the reports, it will be all set and built-up by 2025.
GIFT City: An Ideal Economic and Financial Hub of India
GIFT city – Gujarat International Finance Tec-city is an ambitious project under the act of Special Economic Zone, 2005 that is aimed at the transformation of India into a global financial hub, rivaling the likes of other leading countries. In the unimaginary location in the state of Gujarat, it represents India’s vision of creating a world-class financial center by serving all the financial services to attract both domestic as well as international businesses.
Giving the utmost importance to details, the government has spreaded the area of GIFT city covering 886 acres of land to build up the giant financial hub of the whole.
With state-of-the-art infrastructure, a favorable regulatory framework, and a special economic zone, GIFT City is heading up to revolutionize India’s financial landscape and position the country as a competitive player in the global financial market.
GIFT City is going to be India’s first operational smart city with the development of world-class infrastructure and master planning, which will make India draw a line for renowned countries’ financial centers like London, Shanghai, New York, Hong Kong, Singapore, Dubai, etc.
One Center for All
Promoted by the state government of Gujarat, the project has been designed as a greenfield project, which will include commercial and residential complexes in it.
Considered by IFSC, the GIFT city would be one hub for all the businesses, providing 67% space to commercials, 22% to residentials, and the rest 11% to the communities.
The project will serve its financial services into the area of;
- Banking
- Capital Market
- Financial Company
- Insurances
- Fund Management & Non-core activities
Attracted by the offerings, over 450 entities have registered themselves to be a part of this large range of financial management services. One of the known entities are Axis Bank, Indian Bank, ICICI Bank, Bank of Baroda, and the list keeps going.
All the entities operating in GIFT city, will have access to a single regulatory framework, business-perfect environment, exempted taxes, easy access to currency transfers and transactional services among all other companies in the country.
The GIFT city opens its arms with different opportunities in various fields calling all the employees and investors to establish their business
GIFT City for FinTech Startups
Mumbai and Bangalore, as financial cities of India, have more than 42% FinTech startups in it. Earlier, being the sole operational IFSC of India, GIFT City has introduced a framework for FinTech entities, not only to encourage the innovation of financial products or services but also to give solutions to financial advanced technology.
The FinTech entities investing in GIFT City will have access to customer data, preferences, and activities to follow the way of marketing for financial services and products.
The IFSC is attracting a large number of businesses due to its opportunities and benefits offered to it. As a result, 30 FinTech entities have already registered in the GIFT City.
As the report in air says that Google has expressed its interest in it, too. If Google moves further with its interest in establishing a global FinTech operation in GIFT City, it is expected that other big players from the industry are likely to enter in the project as well.
Significant Rise to GIFT City IFSC in the Union Budget 2023-24
The union budget 2023-24 brought key changes in policies to quick up the process of development and growth.
The changes consists of:
Delegation of SEZ Act Powers to IFSCA
The powers under the SEZ Act, 2005, will be delegated to IFSCA(International Financial Services Centre Authorities) to enhance the regulatory processes and strengthen the role of IFSCA as the unified financial services regulator for GIFT IFSC.
Establishing Single-Window IT System
Establishing a single-window IT system will involve IFSCA, SEZ authorities, GSTN, RBI, SEBI, and IRDAI. This step is taken to improve the business operational process in GIFT IFSC which will eliminate the need for separate NOCs from onshore regulations in India.
Setting up Data Embassies in IFSC
A concept to ensure digital continuity of a country, for which nation’s critical data and digital infrastructures will be stored in a secured location out of the range of its physical border. Any nation would like to establish these data embassies in areas with a supportive legal and regulatory climate.
Setting a Subsidiary of EXIM bank in IFSC
This proposal of setting up a Export-Import bank in IFSC is to provide trade financial solutions to working capital loans and supply chain financing which would aim international trade activities to grow economically and promote competitiveness.
Time Concession in Fund Relocation
In this budget, the current deadline(31st March,2023) for tax relocation of funds from overseas jurisdiction into GIFT IFSC is stretched out for two more years in order to provide asset managers more time to migrate existing offshore funds.
Booming on GIFT IFSC
GIFT IFSC is luring the attention of every small and big businesses from every corner of the world. The comprehensive financial management, tax exemption, financial counselling services,
World-class business environment, and infrastructures are in the eye of every investor in the world.
The big future considerations of GIFT IFSC:
- SWF: The Investment Minister of Saudi Arabia has stated that they are considering setting up an investment office of its Sovereign Wealth Fund(SWF) in GIFT city. Also confirmed to send a strong delegation to GIFT City in a few weeks to explore the opportunities.
- IndiGo and Air India: Two of India’s largest airlines – IndiGo and Air India will set up their lease units in GIFT City. IndiGo will set up a lease unit for financing its aircraft by investing 30 crore.
The thriving economic and financial hub reached a total banking transaction of 508 billion USD in July,2023.
Origin to this, it is visible how many steps have government taken on GIFT City to attract the businesses around the world with its comprehensive financial management and services, now many funds want to move from Singapore, Mauritius, and other jurisdictions to GIFT City to explore opportunities.
Conclusion
In conclusion, GIFT City’s impact on the Indian economy cannot be overstated. The difference this project is going to make is irreplaceable.Its rise as a striking financial, technology, and economy hub is attracting foreign direct investment,strengthening up the financial sector with notable possibilities. The continuous evolving of this project will leverage the Indian financial sector effectually.
