Finance Minister Nirmala Sitharaman has announced growth plans indicating a major boost for GIFT IFSC (International Financial Services Centres). The Budget highlighted the government’s intentions to increase business activity in GIFT City. In an effort to achieve the above, the government plans to delegate powers under the SEZ Act to avoid dual regulation, and set up a single window IT system for registration and approval of IFSCA, SEZ authorities, GSTN, RBI, SEBI, and IRDAI.
Additionally, Finance Minister Sitharaman presented the Budget’s intentions to permit acquisition financing by IFSC banking units of foreign banks, establish a subsidiary Exim Bank for trade refinancing, amend the IFSCA Act for statutory provisions for arbitration and ancillary services, and to recognise derivative instruments as valid contracts. As a final measure towards ensuring a growth spurt of the City, Sitharaman announced, “For countries looking for digital continuity solutions, we will facilitate setting up their data embassies in the GIFT IFSC.”
“The far-reaching measures announced in the budget will go a long way in strengthening the ease of doing business in IFSC at GIFT City. The establishment of an EXIM Bank subsidiary would encourage emerging sectors such as aircraft & ship financing activities in GIFT City. The setting-up of data embassies at GIFT City would facilitate digital continuity solutions for countries seeking such solutions,” said Tapan Ray, MD & Group CEO, GIFT City.
Moreover, the Economic Survey highlighted that GIFT City is “envisioned as the embodiment of Aatmanirbhar Bharat, a hub of ingenuity and innovation.” IFSC, an initiative taken by the government in 2015 to incentivise foreign investment, was noted by the Survey to be the key reason for an “increasingly liberal outlook towards capital account convertibility.” According to the report, the vision is to transform GIFT City into a bustling financial hub, a vibrant city bearing a distinctively international character and pioneering solutions to complex problem statements involving finance. It noted GIFT City as a “path-breaking financial reform” as it emerges as a preferred jurisdiction for International Financial Services (IFS).
Ahead of the Budget release, industry experts believed that in order to encourage growth in GIFT City, improving the socio-cultural aspects should be of the essence. “Rather than focusing more on infrastructure, if we want companies and their employees to create a base in GIFT City, we would need to build schools and recreational spaces,” noted SR Patnaik, partner and head of taxation, Cyril Amarchand Mangaldas.