Is “Gift Gujarat” Going To Be India’s New Best Friend?

To grease the wheels in the global economic marathon, strategies such as GIFT Gujarat has been brought into existence. It is said to be developing into a platform to showcase India’s competitiveness at a global altitude transforming it into a financial zone. GIFT City is the first IFSC (International Financial Services Centre) of its kind in India. What is GIFT Gujarat? `GIFT (Gujarat International Finance Tec-City) is a government plan aiming to provide a high-quality infrastructure to attain a fin-tec developed region, for which it has acquired a land of 359 hectares. This particular land is situated between Ahmedabad and Gandhinagar located in Gujarat. The government of Gujarat is working towards the hitch with an estimated cost of 1300 billion INR for the entire project. The area under construction includes plans of incorporating world-class infrastructure like telecoms, broadband, roads, buildings, district cooling etc. The Government of Gujarat has partnered with Infrastructure Leasing (IL) and Financial Services (FS) as a 50-50 joint venture with Ajay Pandey as the MD and CEO, to develop the central business district as a India’s first Global Financial Hub, giving effect to the financial and technological firms to relocate their operations in Gujarat. “GIFT GUJARAT” A MASTER PLAN: The plan was laid out by our Prime minister Narendra Modi, to build best infrastructures to attract FDI inflows and motivate people to set up offices. The proposed plan is said to boost the economy with employment opportunities on a large scale aiming to generate one million jobs by 2025 in the financial as well as technology sectors. An IFSC is favoured with certain tax benefits and an institution for rapid resolution of disputes. The City is in line and deals with the Reserve Bank of India, Insurance Regulatory and Development Authority (IRDA), Securities Exchange Board Of India (SEBI) and a few other financial institutions. SEBI is envisaged to strengthen commodity derivatives tradings limited to non-agricultural commodities and predominantly entice additional foreign portfolio investments. SEBI has stated to settle cash in foreign currency only on determined price on the overseas exchanges.Currency, commodities and equity segments conforming with the SEBI rules are anticipated to get listed on the new exchanges paving way for the introduction of new products. Is It a Real Gift? Gift City Gujarat progress : An IFSC is favoured with certain tax benefits where infrastructure is said to be deficient or exorbitant. GIFT has been successful in creating more than 8,000 jobs and is anticipated to leap +50% yearly aiming at one million jobs including 500,000 direct employment. Bank of Baroda with more than 1500 employees is the largest employer in this business region. It is expected to make use of 62 million square feet of space for its operational purposes. The smart city is intended to be a centre for setting prices on trading instruments like currencies, commodities etc globally. There are about 11 important domestic banks like HDFC, SBI, KOTAK MAHINDRA etc that have already started operations in this region. Their financial transactions have estimated to crossed 8 billion dollars. The GFCI report lists top 15 centers which are predicted to be remarkable in the upcoming years. GIFT has positioned in the tenth place in the latest edition of Emerging Global Financial Centres (GFCI). The business area is planned to be composed of special economic zone (SEZ), grand hotels, integrated townships, sophisticated educational zone, technology parks, stock exchanges and other advanced institutions. Two 29-floor commercial towers are already constructed leading the way for further upgrowth. There are about 100 capital market players and eight insurance companies who have commenced their base in GIFT. On the grounds of reduced taxes for SEZ’s, overseas currency loans are easily accessible to the abroad Indian companies and other foreign entities. The IRDAI has issued regulations permitting to set up offices in IFSC GIFT for Indian as well as offshore insurers which were restricted earlier, with a bonus of exemption from GST for export of services. The trading will be done for 16 hours and is made adjustable depending on the market demand, covering Singapore market and closing with London. DRAWBACKS OF GIFT: After the implementations are being made, education has not been streamlined and is getting expensive especially for engineering and medical fields. The land is just 12 kms away from Ahmedabad airport, which imposes a few restrictions on the height of the buildings and structures around this area to keep the flight’s path clear. There has also been deliberation on structuring and renewing design of development to fill in the gap of new requirements and the plans. Short-term capital gains taxes on transactions are to be removed to compete with international exchanges operating in IFSCs like Singapore and Dubai. This is because firms without a physical setup in the city making investments in securities, have to pay capital gain taxes. Although there were several discussions on starting an IFSC in Mumbai, currently it is a formidable thought for India. China is the only nation with two international finance centres which were developed with a span of eight years. In a short duration of two years, it has caught the eye of the investors and set to unwind the potential of the country. If the plan is executed in an effective manner and is uninterrupted, it could be cast as a base for syndication of loans for foreign currency and other global activities.
Kranthi Tilak Reddy
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Is “Gift Gujarat” Going To Be India’s New Best Friend?

Kranthi Tilak Reddy
Blog
24th Jan, 2018
Is “Gift Gujarat” Going To Be India’s New Best Friend?

To grease the wheels in the global economic marathon, strategies such as GIFT Gujarat has been brought into existence. It is said to be developing into a platform to showcase India’s competitiveness at a global altitude transforming it into a financial zone. GIFT City is the first IFSC (International Financial Services Centre) of its kind in India.

What is GIFT Gujarat?

`GIFT (Gujarat International Finance Tec-City) is a government plan aiming to provide a high-quality infrastructure to attain a fin-tec developed region, for which it has acquired a land of 359 hectares. This particular land is situated between Ahmedabad and Gandhinagar located in Gujarat. The government of Gujarat is working towards the hitch with an estimated cost of 1300 billion INR for the entire project. The area under construction includes plans of incorporating world-class infrastructure like telecoms, broadband, roads, buildings, district cooling etc.

The Government of Gujarat has partnered with Infrastructure Leasing (IL) and Financial Services (FS) as a 50-50 joint venture with Ajay Pandey as the MD and CEO, to develop the central business district as a India’s first Global Financial Hub, giving effect to the financial and technological firms to relocate their operations in Gujarat.

GIFT GUJARAT” A MASTER PLAN:

The plan was laid out by our Prime minister Narendra Modi, to build best infrastructures to attract FDI inflows and motivate people to set up offices. The proposed plan is said to boost the economy with employment opportunities on a large scale aiming to generate one million jobs by 2025 in the financial as well as technology sectors. An IFSC is favoured with certain tax benefits and an institution for rapid resolution of disputes.

The City is in line and deals with the Reserve Bank of India, Insurance Regulatory and Development Authority (IRDA), Securities Exchange Board Of India (SEBI) and a few other financial institutions. SEBI is envisaged to strengthen commodity derivatives tradings limited to non-agricultural commodities and predominantly entice additional foreign portfolio investments. SEBI has stated to settle cash in foreign currency only on determined price on the overseas exchanges.Currency, commodities and equity segments conforming with the SEBI rules are anticipated to get listed on the new exchanges paving way for the introduction of new products.

Is It a Real Gift?

Gift City Gujarat progress :

  • An IFSC is favoured with certain tax benefits where infrastructure is said to be deficient or exorbitant.

  • GIFT has been successful in creating more than 8,000 jobs and is anticipated to leap +50% yearly aiming at one million jobs including 500,000 direct employment. Bank of Baroda with more than 1500 employees is the largest employer in this business region.

  • It is expected to make use of 62 million square feet of space for its operational purposes.

  • The smart city is intended to be a centre for setting prices on trading instruments like currencies, commodities etc globally.

  • There are about 11 important domestic banks like HDFC, SBI, KOTAK MAHINDRA etc that have already started operations in this region. Their financial transactions have estimated to crossed 8 billion dollars.

  • The GFCI report lists top 15 centers which are predicted to be remarkable in the upcoming years. GIFT has positioned in the tenth place in the latest edition of Emerging Global Financial Centres (GFCI).

  • The business area is planned to be composed of special economic zone (SEZ), grand hotels, integrated townships, sophisticated educational zone, technology parks, stock exchanges and other advanced institutions. Two 29-floor commercial towers are already constructed leading the way for further upgrowth.

  • There are about 100 capital market players and eight insurance companies who have commenced their base in GIFT.

  • On the grounds of reduced taxes for SEZ’s, overseas currency loans are easily accessible to the abroad Indian companies and other foreign entities.

  • The IRDAI has issued regulations permitting to set up offices in IFSC GIFT for Indian as well as offshore insurers which were restricted earlier, with a bonus of exemption from GST for export of services.

  • The trading will be done for 16 hours and is made adjustable depending on the market demand, covering Singapore market and closing with London.

DRAWBACKS OF GIFT:

  • After the implementations are being made, education has not been streamlined and is getting expensive especially for engineering and medical fields.

  • The land is just 12 kms away from Ahmedabad airport, which imposes a few restrictions on the height of the buildings and structures around this area to keep the flight’s path clear.

  • There has also been deliberation on structuring and renewing design of development to fill in the gap of new requirements and the plans.

  • Short-term capital gains taxes on transactions are to be removed to compete with international exchanges operating in IFSCs like Singapore and Dubai. This is because firms without a physical setup in the city making investments in securities, have to pay capital gain taxes.

Although there were several discussions on starting an IFSC in Mumbai, currently it is a formidable thought for India. China is the only nation with two international finance centres which were developed with a span of eight years. In a short duration of two years, it has caught the eye of the investors and set to unwind the potential of the country. If the plan is executed in an effective manner and is uninterrupted, it could be cast as a base for syndication of loans for foreign currency and other global activities.

Kranthi
Blog Author

Kranthi Tilak Reddy is one of the co founders and COO of White Matter Advisory services P Ltd. He is an Engineering graduate from SRM University and has done his Masters in finance.Being a true go-getter and an optimist to the core he has grown up the ranks in banking industry at an astonishing rate, his last stint being Associate Director, Business Clients -South with Standard Chartered Bank. With over 10 years of association with SME businesses and clients he certainly brings rich vein of expertise to the WMA table but more importantly his alluring passion towards great and customer service” the foundation on which he asserts WMA has been built.

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