Experts believe that for GIFT to be successful, the tax regime needs to be more benign. Currently, units operating in SEZs pay MAT of 20%, whereas in Malaysia and Singapore, it is 3% and 10%, respectively
The government on Saturday paved the way for Prime Minister Narendra Modi’s pet project – Gujarat International Finance Tec-City (GIFT) – and said that regulations in this regard will be soon be issued. With this move, corporates like Tata Communications — sole data center operator at GIFT — will see enormous business opportunities going ahead.
Last year in February, State Bank of India (SBI), Tata Communications and World Trade Centre, among others, had received letters of allotment (LoA) to set up offices at GIFT City.
Finance minister Arun Jaitley said on Saturday that while India produces some of the finest financial minds, including in international finance, they have few avenues in India to fully exhibit and exploit their strength to the country’s advantage. “The proposal has languished for years. I am glad to announce that the first phase of GIFT will soon become a reality. Appropriate regulations will be issued in March,” Jaitley added.
Ramakant Jha, MD and group CEO of GIFT City said that an estimated R1,334 crore per day or R2 lakh crore per year, for trading in rupee derivatives trading, is going to locations outside India to other financial hubs. Therefore he sees a substantial part of this trading be captured by Indian firms, if appropriate regulatory and tax regime exists in the country.
“IFSC regulations move is a much needed step to save the billions of dollars worth of financial services business that India is losing out to other global financial hubs like London, New York, Dubai, Singapore and Hong Kong,” Jha said.
Experts believe that for GIFT to be successful, the tax regime needs to be more benign. For instance, units operating in SEZs have to pay a minimum alternate tax (MAT) of around 20%, whereas in Malaysia and Singapore it is 3% and 10% respectively.
According to Ashishkumar Chauhan, MD and CEO of BSE, the International Finance Centre in Gift City is a welcome move. “It would help establish an International Finance Centre which can compete on rules, regulations and ease of business with other International Finance Centres such as Hong Kong, Singapore, Dubai and London,” he added.