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Celebrating Wealth and Vision with GIFT City

PM Narendra Modi initiated the idea of GIFT City way back in 2008 when he was serving as the CM of Gujarat. As quoted by him, “the vision of the country’s future is connected with GIFT City. It is also connected to the dreams of India’s golden past… GIFT City was an idea ahead of its times.”

The aim is to make GIFT City a global gateway. GIFT must emerge as a global laboratory for the fintech sector. It is already making a mark for itself in commerce as well as technology. It is envisioned to be a leader in financial technology, data security and finance. GIFT City is competing well with renowned financial centres in London, Singapore, Tokyo, Paris and Dubai. The city is spread over 886 acres in Gandhinagar which houses a multi-service Special Economic Zone (SEZ) which has India’s first and only International Financial Services Centre (IFSC) and a separate Domestic Tariff Area (DTA).

Along with strengthening the financial transactions, the vision is also that of innovations in aircraft leasing, ship financing, carbon trading and digital currency. GIFT City aspires to be a place which boasts of ease of operations with water-tight regulations and high standards for the rule of law.

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Banking @ GIFT City

RBI has formulated a scheme for the setting up of IFSC Banking Units (IBUs) by Indian banks and foreign banks already having presence in India. The IFSC banking units will be able to provide foreign currency financing requirements of the Indian corporates as well for overseas entities. The Branch will operate as an offshore branch.

IFSC Banking Units are set to provide a wide range of corporate banking services which include:

-Foreign currency transactions
-Deployment of funds to India residents
-Deployment of funds to non-residents
-Factoring and forfeiting of trade receivables
-Raising funds from non-residents
-dealing in derivative and structured products

International banks are spotting a strategic opportunity to serve domestic and international clients from GIFT IFSC. The Bank of America Corporation, a US-based multinational investment bank and financial services company set it s foot in IFSC at an early stage. Other foreign banks at GIFT IFSC include Standard Chartered Bank, Hongkong & Shanghai Bank Corporation Ltd, Citibank NA, Barclays Bank, Deutsche Bank, and JPMorgan Chase Bank National Association.

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Among the India Banks having presence at GIFT City are Bank of Baroda, State Bank of India, Indian Bank and Punjab National Bank. The India private sector banks include Axis Bank, Federal Bank, HDFC Bank, ICICI Bank, IDBI Bank, Indusind Bank, Kotak Mahindra Bank, RBL Bank and Yes Bank.

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How will GIFT City benefit investors?

GIFT City is a gateway that will open foreign capital inflow. It is good for the Indian Asset Management ecosystem, investors in India as well as international investors including NRIs. What is most attractive at GIFT City is the ease of access, streamlined procedures and ease of business. As a result, a lot of traders and investors would prefer to shift to GIFT City which would increase volumes and create liquidity. Liquidity from hedge funds and FIIs would help in exploiting the financial markets even more.

There are also huge tax benefits for the NRIs and foreign investors which will not be enjoyed by the Indian investors currently. NRIs can even invest in derivatives and what they earn as income would be totally be tax free, this is a big incentive by the Indian govt for GIFT City. The trading exchange at the GIFT City would also be open for longer hours.
The trading prices, volumes and trends will be more visible because the trading will start earlier. GIFT City has government backing, tax efficiency, has adopted Singapore arbitration and has world class service providers.

India is the second-largest consumer of gold. Recently, India’s first global bullion exchange, India International Bullion Exchange (IIBX), was inaugurated by Prime Minister Narendra Modi at Gandhinagar’s GIFT city. The international financial services hub is being seen as an effort by the government to provide more transparency to gold trade in India. The new exchange would enable the country to claim its place in the global gold market. It would provide India a chance to be a part of the global value chain. The International Financial Services Centre Authority (IFSCA) would be the regulator. It would oversee the transactions that are presently made internationally.

It is good long term initiative for Indian investors to get liquidity for assets like gold and invest in global companies. Many HNIs and family offices who want to invest in global companies directly, this is a good opportunity. The bullion exchange will give a better band of pricing to the asset class and also provide a good liquidity route. In India there is a lot of gold but very few come on the exchanges to sell it. So the setting up of the bullion exchange is a welcome move for the Indians.

At GIFT City, there is a visible alignment of purpose between the regulator, the government and the industry. This poses a good sign and GIFT City is here to prosper and offer growth to everyone.

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Is it worth investing in gift city?

If there is a perfect place to invest your money right now, it has to be India’s first operational smart city – Gift City, Gandhinagar. Gift City is the dream project of our honourable Prime Minister, Shri Narendra Modi. Though the city was conceptualised long back, it has gained momentum in the recent times. The rate of growth of the city is unmatched.

The reasons to invest in Gift City are many:

As stated by Gujarat Chief Secretary Pankaj Kumar, GIFT City was poised to emerge as the one of the most preferred financial hubs in the world in the coming decade. Investments worth Rs 11,000 crore from 140 companies have been committed to GIFT City. Moreover, the average daily turnover on international exchanges within GIFT City have exceeded USD 4 billion. (Source: Indian Express)

Gift City houses India’s first and only IFSC. This is a multi-service SEZ in Gift City. Currently, there are more than 125 licensed financial entities in IFSC. The key institutions permitted to set up an IFSC unit are the Banking sector, Insurance sector, and Capital Markets.

According to GIFT City officials, some 55 lakh square feet residential real estate space is coming up in the campus with an investment of Rs. 2,700 crore over the next five years.

Several global and domestic companies have started operations in GIFT City with more on the cards. This has brought about an increased demand for residential units. In order to meet the same, several renowned builders are entering into the city. These developers are creating designs that are in line with the walk to work concept.

NRIs and foreign investors are being allow low tax rates on investments made in IFSC. Also, a large number of Alternative Investment Funds (AIFs) have found a ground in IFSC.