GIFT City or Gujarat International Finance Tech City, is a planned business district in the state of Gujarat, India. It aims to be a global financial and technology hub, offering world-class infrastructure, facilities, and services to various sectors such as banking, insurance, IT, and consulting. But what is the purpose of GIFT City India, and how does it benefit the Indian economy? In this blog post, Lares wants to discuss with you about Gift City in India affects the economy we will explore these questions and more.
What is GIFT City?
GIFT City is an ambitious project that was conceived in 2007 by the then-chief minister of Gujarat, Narendra Modi, who is now the prime minister of India. The idea was to create a special economic zone (SEZ) that would attract foreign and domestic investment, generate employment, and boost the state’s and the country’s economic growth. The project was officially launched in 2015, and since then, it has been developing rapidly, with several companies setting up their offices and operations in GIFT City.
GIFT City in India is spread over an area of 886 acres, divided into two zones: a domestic zone and an international zone. The domestic zone caters to the Indian market, while the international zone operates as a multi-service SEZ, with special tax and regulatory incentives for foreign investors. GIFT City also boasts of a smart city infrastructure, with features such as underground utility tunnels, district cooling systems, automated waste collection, and intelligent transport systems. GIFT City also has a dedicated power supply, water supply, and communication network, ensuring uninterrupted and high-quality service delivery.
Purpose of GIFT City In India
The main purpose of GIFT City in India is to create a world-class financial and technology center that can compete with other global hubs such as London, New York, Singapore, and Dubai. GIFT City aims to provide a conducive environment for various sectors and activities, such as banking, insurance, capital markets, asset management, fintech, IT, BPO, KPO, and e-commerce. GIFT City also intends to promote innovation and entrepreneurship, by fostering a culture of research and development, incubation, and collaboration.
One of the key objectives of GIFT City is to develop an international financial services center (IFSC), which is a special jurisdiction that allows financial institutions to offer offshore services to non-residents. An IFSC can facilitate cross-border transactions, such as foreign exchange, securities trading, banking, insurance, and fund management. An IFSC can also enable the development of new products and services, such as international bullion exchange, international commodity derivatives exchange, international financial education center, and international arbitration center.
Another important goal of GIFT City is to create a digital and data hub, which is a platform that enables the collection, storage, processing, and analysis of large volumes of data. A digital and data hub can support various applications, such as big data analytics, artificial intelligence, cloud computing, blockchain, and the Internet of Things. A digital and data hub can also enhance the efficiency, security, and transparency of various processes and transactions, such as e-governance, e-commerce, e-health, and e-education.
Regulations of GIFT City in India
GIFT City operates under a special regulatory framework, which is designed to attract and facilitate foreign and domestic investment while ensuring compliance with international standards and best practices. Some of the key features of the GIFT City in India regulations are:
- Tax incentives: GIFT City offers various tax benefits to the entities operating in the SEZ and the IFSC, such as exemption from income tax, dividend distribution tax, minimum alternate tax, securities transaction tax, capital gains tax, and goods and services tax. These incentives are applicable for a specified period, depending on the nature and size of the investment.
- Regulatory relaxations: GIFT City allows the entities operating in the SEZ and the IFSC to enjoy certain regulatory relaxations, such as lower capital and liquidity requirements, higher exposure limits, simplified KYC and AML norms, and permission to deal in foreign currency. These relaxations are subject to the approval and supervision of the relevant regulators, such as the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, and the Pension Fund Regulatory and Development Authority of India.
- Single-window clearance: GIFT City provides a single-window clearance mechanism, which enables the entities operating in the SEZ and the IFSC to obtain all the necessary approvals, licenses, registrations, and permissions from a single authority, namely the GIFT SEZ Authority. This mechanism reduces the time and cost of doing business and enhances the ease of doing business.
What are the Benefits of GIFT City in India?
GIFT City in India offers several benefits to the Indian economy, such as:
- Generating employment: GIFT City has the potential to create over 10 lakh direct and indirect jobs, across various sectors and skill levels, by 2030. GIFT City also provides opportunities for skill development and training, to enhance the employability and productivity of the workforce.
- Boosting exports: GIFT City can contribute to the growth of India’s exports, by facilitating the trade and movement of goods and services, especially in the financial and technology sectors. GIFT City can also help in reducing the trade deficit, by enabling domestic entities to access the global markets, and by attracting foreign entities to invest and operate in India.
- Enhancing competitiveness: GIFT City can enhance the competitiveness of the Indian economy, by providing a world-class infrastructure, facilities, and services, to the domestic and foreign entities. GIFT City can also foster a culture of innovation and entrepreneurship, by supporting the development and adoption of new products and services, and by creating a vibrant ecosystem of research and development, incubation, and collaboration.
- Attracting investment: GIFT City can attract significant investment, both foreign and domestic, in various sectors and activities, such as banking, insurance, capital markets, asset management, fintech, IT, BPO, KPO, and e-commerce. GIFT City can also mobilize capital for various infrastructure and social projects, by facilitating the issuance and trading of bonds, debentures, and other instruments.
GIFT City’s Contribution to the Indian Economy
GIFT City has already made a notable contribution to the Indian economy, in terms of investment, employment, and revenue. Some of the key achievements of GIFT City are:
- Investment: GIFT City has attracted over Rs 15,000 crore of investment, from various domestic and foreign entities, such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, State Bank of India, Axis Bank, Bank of Baroda, Yes Bank, Standard Chartered Bank, HSBC Bank, Deutsche Bank, JP Morgan, Citibank, BSE, NSE, MCX, India INX, NSE IFSC, MCX IFSC, GIFT IFSC, and many others.
- Employment: GIFT City has created over 15,000 direct and indirect jobs, across various sectors and skill levels, such as banking, insurance, capital markets, asset management, fintech, IT, BPO, KPO, and e-commerce. GIFT City also has over 250 companies operating on its premises, with a combined workforce of over 10,000 people.
- Revenue: GIFT City has generated over Rs 1,500 crore of revenue, from various sources, such as lease rentals, utility charges, service fees, and taxes. GIFT City also has a cumulative business turnover of over $100 billion, from various activities, such as banking, insurance, capital markets, asset management, fintech, IT, BPO, KPO, and e-commerce.
GIFT City in India is a visionary project that aims to transform the Indian economy, by creating a global financial and technology hub, that can compete with the best in the world. GIFT City has already achieved remarkable success, and has a bright future ahead, with more opportunities and challenges to come. GIFT City is not just a city, but a gift to India.