Dubai: Backed by a market of 1.2 billion people and an economy growing in excess of 7 per cent, for Gujarat International Finance Tec-City (GIFT) growth numbers are not tough targets in the near future. However, in a highly competitive global market, its long term prospects will be largely driven by robust regulatory frame work and fast adoption of best global practices, Ajay Pandey, managing director and CEO of GIFT City told Gulf News in an interview.
Barely one year into operations, country’s first international financial services centre (IFSC), has crossed the $2 billion (Dh7.34 billion) mark in turnover and is likely to grow manifold in the near term. The GIFT IFSC, which has generated 5,000 jobs so far, is expected to create a million more employment opportunities by 2025. The management expects to create at least 10,000 jobs by the end of this year.
“GIFT IFSC has already crossed cumulative business transactions worth $2 billion. We expect business volumes to surge further once we get regulatory clearance from Securities and Exchanges of Boar of India (SEBI) to launch more products like currency derivatives in the international exchanges,” said Pandey.
The GIFT City launched in 2015 in Ahmedabad is a privately managed city with a special economic zone (SEZ) and a separate domestic area with a residential, commercial and social buildings. It is a 50-50 joint venture between the Gujarat Urban Development Company Limited (GUDCL) and Infrastructure Leasing & Financial Services Limited (IL & FS).
Tax benefits
On the capital markets side of the business, Bombay Stock Exchange has already opened its branch in GIFT City and NSE is awaiting final approval from SEBI to begin its international bourse at IFSC. In addition to the stock exchanges, GIFT already has nine banks, two insurance companies, and more than 100 brokerages operating offices from there.
Created within the framework of a SEZ, GIFT enjoys certain tax benefits. Clearly the tax arbitrage opportunities are expected to attract a large number of Indian banks and financial services firms and Global financial institutions that already have presence in India to set up subsidiaries within GIFT.
Despite the enthusiastic response of the domestic financial services sector and global players already present in India, attracting new international participants comes with the challenge of offering globally acceptable regulatory regime.
On the possibility of formation of a separate regulatory body to monitor GIFT IFSC, Pandey said that the government is discussing the subject, but no formal process has been initiated yet.
“Today, GIFT IFSC is being regulated by three regulators — Securities and Exchanges Board of India (SEBI), the Reserve Bank of India (RBI) and Insurance Regulatory and Development Authority (IRDA), and they are regulating in a carved out fashion. A separate regulator will streamline the process, but no formal process has begun,” he said.
Commercial disputes
In a first step towards, globally accepted best practices in dispute resolution, GIFT has recently tied-up with the Singapore International Arbitration Centre (SIAC) for mutual settlement of commercial disputes through arbitration and mediation.
Panday said he is optimistic on creation of a robust regulatory regime for the centre in the due course. “We are a very new financial centre and we have a lot to learn from other successful financial centres in the world. There is ability and willingness to create both legal and regulatory framework. There is what is called an IFSC task force chaired by Union Minister of State for Finance and Corporate Affairs and this subject has been discussed, but this a consultative process,” he said.
