The Gujarat International Finance Tec (GIFT) City will emerge as a hub for offshore companies as the "enabling framework" and the competitive cost of operation are being put in place, according to a top official.
The Budgetary announcement proposing setting up a unified regulator and waiving the short-term capital gains tax on trades at International Financial Services Centre (IFSC) at the GIFT City are major steps in this direction, its MD and CEO Ajay Pandey said here today.
"In terms of enabling framework, a few things are required, like good taxation regime. We can say that this condition is to a large extent has been met with the short term capital gains tax being waived," Pandey told reporters at a press conference.
"It is now easy for these companies to set up offices here. Earlier there was a condition that you first register yourself in the domestic area, then you get permission, and then you come here. Now they can come directly.
"For some fund business, even 9 per cent minimum alternate tax (MAT) is not applicable. So it opens up new story, new framework, so that people don't have to come to India via Mauritius or Singapore. They can come here directly. Hence some of these things will make it a big business," Pandey said.
He said that businesses pertaining to India which were so far being done in Hong Kong, Dubai or Singapore, can now be more easily done through the GIFT City, which will make it an attractive option for such firms.
"In the taxation regime, we are very close to what Singapore offers. In Singapore, the maximum tax percentage is 10, in our cases it is 9 per cent. For some foreign investors, tax has been brought down to zero. In real sense it is very competitive," he said.
"(RBI Governor) Urjit Patel had announced during last Vibrant Gujarat Summit that GIFT should have a unified regulator if it has to move ahead. The government has made this possible with the policy announcement, which is a good thing," he said.
Even in terms of cost of operation, GIFT City emerges as around 20 per cent cheaper than other foreign competitions, which adds to its attractiveness, Pandey said.
He said around three-four foreign banks and three foreign insurance firms are in the final stages of discussions before they move here.
"There are 3-4 foreign banks that are close to their decision to come here, and are waiting for the green flag from Reserve Bank of India (RBI). In insurance sector, we have three companies which are very close to taking decision. This year we will be able to see some foreign players coming to GIFT City," Pandey said.
GIFT City has already attracted committed investment of around Rs 10,000 crore, with 162 businesses already operational, out of which 40 are domestic business.
The total sum insured by insurance firms at the IFSC has exceeded $20 billion, while banking transaction has exceeded $8 billion mark, and cumulative trading volume has reached $10 billion, another GIFT official said.
In terms of physical infrastructure, out of 15 million square feet allotted, 2 million sq ft has been made operational, while 3 million sq ft is currently under construction while the rest 10 million sq ft is under planning and designing stage, he said.
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