- Date : 19/08/2022
- Read: 3 mins
The Government has bestowed GIFT city with tax incentives, appointed a single regulator, ensured best-in-class infrastructure, etc. Are these measures enough to attract global companies and investors and make India a financial hub?
On 29 July 2022, Prime Minister Narendra Modi inaugurated the India International Bullion Exchange (IIBX) at GIFT City, Gujarat. It was one of the many steps by the Indian Government to make GIFT City the financial hub of Asia. In this article, we will discuss the Government’s approach to GIFT City and whether it is enough to make India the financial hub of Asia.
What is GIFT City?
Gujarat International Finance Tec-city or GIFT City is a planned central business district in Gandhinagar, Gujarat. It offers a competitive edge to financial services and technology-related activities. The Government plans to make GIFT City of India the financial hub of Asia, along the lines of Singapore or Shanghai, or global financial hubs such as London, Dubai, Paris, New York, etc. To fulfil its vision of making India a financial hub, the Government has taken the following steps for GIFT City.
Setting up the International Financial Services Centre (IFSC)
The Government has set up an IFSC under the Special Economic Zone (SEZ) Act with tax incentives and legal privileges. Entities such as stock exchanges, intermediaries like brokers, depositories, etc., that operate from the IFSC will get certain relaxations from SEBI. The RBI has allowed these entities to do business in foreign currency.
Establishment of the International Financial Services Centres Authority (IFSCA)
Separate regulatory bodies regulate banks, insurance companies and capital market participants. However, entities operating from GIFT City will be regulated by a single super-regulator: IFSCA. This will help in getting speedier approvals and also streamline regulatory compliance. With the establishment of IFSCA and single-window clearance, many financial companies have already made their presence felt at GIFT City of India.
Attractive tax incentives
The Government has announced certain tax incentives for units operating from the IFSC located in GIFT City Gandhinagar. Some of these include tax holiday on profits, minimum alternate tax at a reduced rate, capital gains tax exemption, concessional withholding tax rate, etc. The Government has also announced a few measures to encourage aircraft and ship leasing companies to start their businesses at GIFT City.
Will GIFT City make India the financial hub of Asia?
Thanks to the initiatives outlined above, many banks and other financial services companies have set up shop in GIFT City. BSE and NSE have set up units, and certain Indian and international companies have raised funds through these exchanges located at GIFT City. Some companies have expressed interest in starting an aircraft-leasing business from GIFT City.
On 29 July 2022, PM Modi inaugurated the India International Bullion Exchange (IIBX) at GIFT City Gujarat. All these steps will surely help realise the vision of making India the financial hub of Asia and the world.