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BSE Ltd, Asia's oldest stock exchange, plans to set up an international exchange in Gujarat with an initial investment of Rs 150 crore. On Monday, it signed a conditional memorandum of understanding (MoU) with GIFT SEZ Ltd, (Gujarat International Finance Tec-City Special Economic Zone).
The SEZ plans to house an international financial services centre. Ashish Chauhan, managing director of BSE, said the international exchange will compete with other international financial destinations such as Dubai, Singapore, Hong Kong and London. The MoU is subject to the condition that the exchange will be able to enjoy the tax exemptions to be extended to all the international financial entities operating within GIFT. Once the tax benefits are made available, the exchange will be able to act as an international trading centre for both investors investing into India and those wishing to invest outside India.
India-focused funds located at international business centres such as Dubai, Hong Kong and Singapore will be able to relocate to GIFT City and enjoy lower taxes, industry sources said.
“The MoU has been signed based on the expectation that the exchange will get all the benefits of being a ‘deemed foreign territory’. The tax benefits are not applicable as of now but they are expected to be available soon,” said Alok Churiwala, vice-chairman of BSE Brokers’ Forum. GIFT SEZ is an equal joint venture between the Gujarat government undertaking Gujarat Urban Development Company and IL&FS. It is a central business district located between Ahmedabad and Gandhinagar.
According to a BSE statement, India has lost 50 per cent market share to foreign bourses in India-related rupee and index products market. The trading volume for the rupee and India-based indices products is pegged at over $100 billion a day, the statement said.
Even if a small slice of this trading comes back to India, it would be a substantial achievement for India, the statement noted. “It will also help international companies raise finance from other international investors within the International Finance Centre, which can compete on rules, regulations and ease of business with other International Finance Centres such as Hong Kong, Singapore, Dubai and London,” it added.
