Gujarat International Finance Tec-City (GIFT), India’s operational smart city has been functioning for over four years and houses more than 225 IT, ITeS and BFSI companies with approximately 9,000 employees. With IFSC banking units of 13 major banks, the international financial services centre is clocking foreign currency business transactions worth $18 billion. Tapan Ray, an IAS officer of the 1982 batch and former corporate affairs secretary, had been appointed as the managing director of the ambitious project recently. In an interview with FE’s Jyotsna Bhatnagar, he outlines his plans to convert GIFT City into a services sector hub. Excerpts:
What is your immediate to-do list for the GIFT City project?
GIFT City has become a choice business destination for the financial and IT sectors. Our immediate priority on hand is to reach 30,000 jobs in next three years and to connect GIFT City platform with leading national and international institutions. Our vision is to make GIFT the financial and IT gateway for the country as it provides an ideal platform for both inbound and outbound investments. In the process we aim to become the growth pole of the financial services sector.
Several companies and new sectors are now eyeing GIFT as an attractive destination. Is there a conscious effort to bring new growth drivers?
GIFT City basically targets the services sector industry, such as financial and technical services. However, with rapid changes in these sectors, and with the disruptive use of technology we need to be agile in our responses. While our core vision to create a financial and technology hub remains constant, new opportunities in the form of new business verticals are evolving such as e-commerce, fintech, among others, which will drive growth of the service industry. Several IT/ITeS companies are actively considering GIFT City as an attractive investment destination due to its world class infrastructure, a lower operating cost, and better quality of life. With the sunset clause for IT companies set to kick in March 2020, we will see greater interest from them. On the IFSC front, aircraft leasing and financing businesses has great potential to grow. The Union Budget 2019 has announced the setting up of Aircraft leasing and financing business in IFSC.
Could you detail the committed investments GIFT has been able to attract thus far?
GIFT City has been able to attract committed investment of around Rs 11,000 crore so far.
Is it anywhere close to becoming India’s own financial hub on the lines of Singapore or Dubai?
GIFT IFSC has positioned itself as an emerging IFSC of South Asia. It is home to 13 IFSC Banking Units (IBU) of major Indian banks and recently Standard Chartered was the first foreign bank to receive in principle approval to open its IBU here. The IBUs have crossed business transactions of around $22 billion since they became operational in 2015. International Exchanges present here have crossed daily trading volume of $4 billion in last two years. Insurance businesses have clocked in sum insured business of around $30 billion. Being a multi-services SEZ-IFSC, export of services have crossed Rs 3,500 crore, in March 2019 compared to Rs 7.05 crore in 2015-16. It is likely to exceed Rs 5,000 crore in the current financial year.
How do you think this year’s Union Budget’s numerous initiatives for the GIFT project are going to pan out on ground and in what time horizon could tangible action be visible?
Announcements made in Budget 2019 have reiterated the importance of GIFT IFSC as an emerging international financial services hub. Establishing a unified regulator will further put it in a fast track mode. Other related regulations presented in the Budget will give a tremendous boost to investor confidence both in India and abroad to invest here.
Key measures related to aircraft leasing business, reinsurance business, tax reforms, will enable significant offshore finance activities to take place and create jobs in the financial services industry. It will bring back billions of dollars of business which we have been losing to other competing global financial hubs. We are in final stages of discussion with few large players to set-up their large operations here. Once this happens and employment level hits a critical mass, companies will automatically prefer GIFT City as the preferred destination as benefits of external economies of scale will kick in.