IFSC, which stands for International Financial Services Center is designed to boost the growth of the local economy by attracting foreign financial services and investments. In Gujarat, this vision is embodied by the Gujarat International Finance Tec-City (GIFT City), which is rapidly emerging as a significant global finance hub. The Indian government is actively promoting the Gujarat International Finance Tec-City, known as GIFT City, as a premier "gateway for global capital and financial services for the economy." In an effort to attract companies, the government is offering tax breaks and other incentives to entice businesses to establish a presence within the city. GIFT City aims to provide a world-class infrastructure and regulatory framework to facilitate global financial services, as well as trade and commercial real estate. This blog explores why GIFT City is becoming a preferred destination for Indian businesses and financial managers looking to relocate their overseas operations and the momentum it is gaining in the international financial scene.
The Charm of GIFT City
Located on the banks of the Sabarmati River near Ahmedabad, Gujarat, GIFT City stands as a pinnacle of modern infrastructure and cutting-edge facilities tailored to the needs of financial services. With state-of-the-art connectivity, robust IT infrastructure, and a supportive regulatory framework, GIFT City presents a compelling proposition compared to traditional financial centers like Singapore and Hong Kong.
GIFT City offers comprehensive services, including banking, brokerage, and insurance operations that benefit from India's regulatory regime, which is specifically designed to facilitate ease of doing business. Furthermore, GIFT City's strategic location combines with its tax incentives, including exemption from various local taxes, to create an environment conducive to business growth and development.
Shift of Indian Manager and Businesses
According to a report, approximately eight out of ten Indian asset managers have relocated their businesses or set up new branches of their businesses to GIFT City.
Supporting this fact, Swarup Mohanty, the chief executive of Mirae Asset Investment Managers stated, “The stable regulatory regime and proximity to the Indian markets is driving our descision.” The official also revealed the shift of a $200 million Hong Kong-based fund to GIFT City and is planning to move their second fund to GIFT City. Mirae Asset Investment Managers is a subsidiary of Mirae Asset Financial Group, a South Korean financial services provider. The Indian unit is looking to manage up to $435 million from Gujarat International Finance Tec-City (GIFT City) in the near future. Currently, the company manages a total of 1.46 trillion Indian rupees ($17.58 billion) of assets in India. GIFT City provides an attractive business environment by offering a 10-year tax holiday to companies that set up their base there. Additionally, there are no taxes imposed on the transfer of funds from foreign jurisdictions, and no capital gains taxes for investment in units established at GIFT City, making it comparable to other financial hubs like Singapore or Dubai. Adding more to this, Sachin Samant, the president of the banking and financial institutions group at Kotak Mahindra Bank said, “It is substantially more cost effective to run a fund in GIFT City as compared to Mauritius and Singapore due to lower cost of living, rentals and cost of manpower.” Following this Jay Kothari, a senior VP added that DSP Mutual Fund, managing $20 billion assets in India and abroad, plans to move its Mauritius-based operation, which manages $400-500 million assets, to GIFT City by March. Aditya Birla Sun Life Asset Management Company, which is ranked as the sixth largest asset manager in India with assets under management worth 3.08 trillion rupees, has recently announced its decision to shift its operations from Dubai and Singapore to Gujarat International Finance Tec-City (GIFT City). A. Balasubramanian, the chief executive for Aditya Birla Sun Life AMC said, “Outside of multiple inbound funds, we have one outbound fund and have an approval to set up an ESG-focused fund with seed investment already in place.” In the past three years, more than 80 fund managers have established operations in GIFT City, with total commitments of $30 billion and investments exceeding $2.93 billion. This information comes from the International Financial Services Regulatory Authority (IFSCA), which oversees financial services in GIFT City.
Economic and Strategic Implications
The influx of businesses into GIFT City is set to have a profound impact on India's economy, enhancing its position in the global financial market. The consolidation of financial services in GIFT City helps streamline operations and reduce costs, fostering more robust economic growth and creating numerous job opportunities.
However, the growth trajectory is not devoid of challenges. Issues such as bureaucratic delays, the need for international direct connectivity, and the adaptation to global financial standards are being progressively addressed by the authorities to ensure GIFT City's success on the world stage.
Conclusion
GIFT City is rapidly establishing itself as a formidable force in the global financial landscape. With its state-of-the-art facilities, strategic government policies, and the increasing shift of Indian businesses back to domestic shores, GIFT City promises to be a central player in reshaping India's economic future.
As it continues to evolve and attract more international businesses, the potential of GIFT City seems limitless, promising a vibrant future for India in the international financial arena and making it the best era for investing in GIFT City properties. Contact RES Management and find the best property in the emerging international financial hub of India.
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