Indian Prime Minister Narendra Modi’s government wants to turn GIFT City into a global centre for the new age of global financial and technology services. Modi’s ambition needs to be matched with cash investments. A high-level delegation recently visited Brussels seeking European funds.
The high-level delegation from the International Financial Services Centres Authority (IFSCA) led by Chairman K. Rajaraman visited Brussels in late February, to present plans for becoming the gateway for global investors and funds based in Belgium, Luxembourg and the European Union to invest in India.
The delegation met with senior officials of the European Investment Bank (EIB), to discuss the EIB’s role in financing, and in particular, sustainable finance. They also addressed how the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) is emerging as an important inbound and outbound gateway for international financial services in India.
The delegation’s visit marks a significant moment in India-EU relations, as more than 6,000 European companies are now present in India, directly providing 1.7 million jobs (indirectly 5 million jobs) in a broad range of sectors, according to European Commission data.
GIFT City, a new Singapore?
GIFT City, where the IFSCA is headquartered, is India’s first operational greenfield smart city and a tax-neutral centre, aiming to compete with hubs such as Singapore, providing fiscal incentives and a looser regulatory environment. IFSCA, established in 2020, is the regulatory body for India’s special economic zones, such as GIFT IFSC, and commodity markets under the ownership of the Government of India.
Although under construction, it is already home to tens of multinational banks, fintech entities, international stock exchanges, as well as India’s first international bullion exchange.
There are plans for more Indian asset managers to shift overseas business to GIFT City, as the government is trying to attract companies through tax breaks and other incentives. Reportedly, more foreign firms are also looking to set up bases in the city.
According to The Economic Times, the IFSCA has already approved some entities to commence operations on the platform. GIFT City may also see India’s first regulated real estate and infrastructure asset tokenization platform, aiming to provide fractional ownership opportunities to small investors using blockchain technology. It’s also beginning to establish itself as the centre of foreign universities in the nation, with the opening of the first campuses of two Australian universities in November last year.
Fast lane for Formula 1
The development plan for the city includes the possibility of constructing a Formula 1 motor racing circuit, with six teams of renowned race track designers already competing to design the circuit, thus relaunching India as a global motor racing destination. The city aspires to host the Olympics in 2036.
Speaking at the BT Banking Summit in late March, Rajaraman stated that: “GIFT City’s fund industry and the banking sector will play a pivotal role in making India a $30 trillion economy by 2047.”
As the country needs over $10 trillion for the green reforms industry, Rajaraman has highlighted green financing as one of the priorities at GIFT City. “GIFT City banks have lent $700 million as sustainable finance, and $12 billion worth of sustainable bonds have been listed. We will work towards making IFSCA a climate finance hub for India and the Global South,” he said in January, addressing a Gandhinagar seminar on “GIFT City – an aspiration for modern India”.
According to Rajaraman, the authority he leads can be the gateway to bringing $100 trillion of capital sitting outside India, while Modi’s government wants to turn GIFT City into a global centre of the new age of global financial and technology services.
Modi has said that: “GIFT is an efficient channel to make India a low-carbon economy and get the required green capital flow. Issuance of financial instruments such as green bonds, sustainable bonds, and sustainability-linked bonds will help the world.”
[By Xhoi Zajmi I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]
