GIFT City: How PM Modi's pet project is primed for a takeoff

Over the past 10 years, the Narendra Modi government has been able to push through some key reforms in the financial sector. Chief among them are the Insolvency and Bankruptcy Code, the Pradhan Mantri Jan Dhan Yojana on financial inclusion and, of course, the Unified Payments Interface (UPI). As the government nears the end of its second term, one of the biggest moves it is currently engaged in—believed to be a pet project of Prime Minister Modi—is to bring global finance into India in a major way in the form of the Gujarat International Finance Tec-City, or GIFT City, the international financial services centre (IFSC) near Ahmedabad. GIFT City is now in the process of getting a major fillip as the government eases regulations, creates infrastructure and ensures ease of doing business to ensure global and Indian financial firms set up operations there. The buzz around GIFT City was in ample evidence at the recent Vibrant Gujarat Global Summit, where the PM and Finance Minister Nirmala Sitharaman underscored the seriousness of the government’s intent to ensure the IFSC becomes a major player in the frenetic world of global finance.

GIFT IFSC currently houses 580 operational entities, including three exchanges, 25 banks (including foreign ones), 29 insurance entities, two foreign universities, 26 aircraft lessors, 40 fintech firms and over 50 professional services providers. It has over $52 billion in total banking assets and about $25 billion in committed investments from 80 funds. And this is only the beginning. With around 400 offices and 26,000 people already working there, GIFT IFSC is on its way to becoming a serious player on the lines of Singapore and Dubai and turning into a reinsurance, aircraft- and ship-leasing hub.

Surabhi brings you the ground report from GIFT City in our cover story, pointing out that it is “primed for action”. A key move making it attractive for global players is the regulatory dispensation allowing for ease of international finance, particularly with the setting up of the International Financial Services Centres Authority (IFSCA), the regulator. “We would want them [foreign investors] to come into a jurisdiction where they feel at ease in terms of ease of doing business, the quality of the regulations, the clarity of the regulations, tax certainty and so on,” says IFSCA Chairperson K. Rajaraman. A move to allow direct listing of firms in GIFT City is expected to boost activity further.

Elsewhere, we bring you a curtain-raiser on the Interim Budget 2024 to be presented by the Finance Minister. While she has made it clear that there would be no spectacular announcements, there are expectations that it may give a push to rural households and provide some tax relief to individuals. The Interim Budget will need to continue on the fiscal consolidation path, but it’s an election year after all.