Wednesday 15 June 2016

GIFT City - India's upcoming global financial hub


The global finance business is ever booming. Global financial services industry is undergoing major reforms. New York, London and Zurich were classified as global financial hubs around 40 years ago. In the early 90s, Singapore and Hong Kong emerged as a natural choice for global financial investors. Smaller and highly efficient governance resulted in 'Ease of Doing Business'. Gujarat International Finance Tech City ( GIFT City ) is India's upcoming global financial hub situated between Ahmedabad and Gandhinagar.

GIFT City is planned as a financial Central Business District. GIFT will be classified into processing area and non-processing area. Processing area will include IFSC, techno park, commodity exchanges, global trading exchanges, banks, insurances and KPOs. Non processing area will consist of commercial buildings, hotels, restaurants, hospitals, schools and government offices. GIFT City will have a FSI of 3.65, one of the highest in India.

An IFSC caters to customers outside of its jurisdiction of domestic economy. Nearly all banks plan to open a Offshore Banking Unit in GIFT City. YES Bank, ICICI Bank, Kotak Mahindra Bank, IDBI Bank etc have already started their international banking unit operations. Since launch, IFSC business in GIFT City have reached $250 million milestone in just 6 months. By the end of FY17, IFSC business in GIFT City may reach $1 billion. It is estimated that $50 billion worth of international business is conducted outside of India in absence of IFSC in India. GIFT City and Mumbai's BKC IFSC may employ 2 million people by 2020.

As observed globally, IFSC gives boost to local economy and improves the standard of living. In the span of 30 years, Singapore and Hong Kong have emerged as wealthier nations. IFSC are an invitation to high pay jobs which adds impetus to consumption GDP. Wealth adds to brand image as IFSCs around the world attract international businesses and tourists. With Metro, AC buses and ICT, GIFT City is truely an utopia of urban living.

GIFT City has signed a Memorandum of Agreement with Singapore International Arbitration Centre. Any successful IFSC requires an efficient dispute redressal mechanism. SIAC is widely used by indian companies. According to MOA, SIAC will establish a representative office in GIFT IFSC.

Major stock exchanges, banks and insurance companies are moving their business to GIFT City. State Bank of India will have its own building with 2 lakh square metre space. Reliance Capital is also planning to build its own building. 5 foreign banks are awaiting clearance from RBI to set up operations in IFSC.

TheIndianCapitalist.com's take

Gujarat's GIFT city is at its initial phase. Major financial services are planning to run its operation at earliest in GIFT but are reluctant because of lack of public infrastructure. Ahmedabad Metro and BRTS will connect with GIFT City in future. Success of any CBD depends upon its strategic location and connectivity. TheIndianCapitalist.com is of a view that GIFT IFSC and Mumbai BKC IFSC can co-exist.

- Chaitanya Kulkarni ( theindiancapitalist.com )

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