What is the purpose of GIFT City

The “purpose of GIFT City is – ‘To design a CBD that will serve as a paradigm for Next Class city in terms of quality of life, infrastructure and ambience aiming to be high-density and high-rise, treating land as a precious resource.’

GIFT City is located on the banks of Sabarmati River and is spread across 886 acres of land. It is designed with a futuristic approach. It professes sustained development with focus on environment and ecological balance. The purpose of setting up such an ecosystem is to develop a globally benchmarked integrated city and keep pace with modern technologies.

It also offers a testing ground for checking the efficacy of reforms and innovations in various fields including planning, infrastructure, environmental protection and so on.

The city also aims at providing world-class, comfortable living experience to its residents and fulfil their needs of safety, cleanliness, hygiene, education, amenities and a friendly culture.

GIFT is rightly called a smart city owing to technological adaptations which include low energy consumption, efficient waste management, district cooling system, uninterrupted power supply and much more.

GIFT City is an emerging global financial and IT services hub, a first of its kind in India. It is supported by state-of-the-art infrastructure encompassing all basic urban infrastructure elements along with an excellent external connectivity. Companies from Financial Services, Technology and other services sectors are the best occupants for the city.

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.

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.

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.

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.

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.

Salient features of GIFT City, Gandhinagar

GIFT City has been conceptualised as a global financial and information technology services hub. The design of GIFT City integrates state-of-the-art connectivity, infrastructure and transportation. The main goal is to develop GIFT City as a world-class hub to facilitate the delivery of a wide range of cross-border financial services to clients in other countries.

GIFt City has many advantages like:

Integrated development

The city is laid out on an area of 886 acres of land with 62 mn sq. ft. of Built Up area which includes Office spaces, Residential Apartments, Schools, Hospital, Hotels, Clubs, Retail and various Recreational facilities, which makes this City a truly “Walk to Work” City. This City is a Vertical City which will optimize land area consumption for development. The City is located on the bank of river Sabarmati connecting the Business capital (Ahmedabad) and Political capital (Gandhinagar) of Gujarat State- The Growth Engine of India.

Urban Infrastructure

GIFT City has designed an efficient infrastructure that is energy conserving and environment friendly. The city adheres to the green building principles with an urban planning that ensure the nature is preserved and wastage is reduced.

Desired quality of life

GIFT City offers a lifestyle that everyone desires. Right from smart use of technology, which includes automated waste collection, utility tunnel, district cooling system, GIFT City offers the best of everything. The residents of the city shall enjoy a cleaner and greener life along with recreational facilities including club house, sports and other forms of entertainment.

Business Opportunities

GIFT City is a planned business district in Gujarat. It is the new business destination offering competitive edge to Financial services and Technology related activities. The City is a great opportunity for the Services sector growth in India and there is an advantage for everyone to participate. Real Estate Developers and various Financial & IT/ITeS Institutions can be a part of one of the most ambitious infrastructure and technological Smart City project. Numerous Indian and foreign companies have already made a foray into the GIFT City.

Will India become a global hub via gift city?

GIFT City is a dream project of our Honourable Prime Minister, Mr. Narendra Modi. The International Financial Services Centre is the vision of the Indian government to make it a global hub for financial services transactions. This would translate into an increased flow of Foreign Direct Investments in India.

Several announcements made in the budget serve as an attraction for the foreign investors. Tax holidays have been announced for the offshore funds to redomicile into India, giving them the same tax benefits that they are enjoying in other places. SEBI has issued operational guidelines providing that registered foreign portfolio investors (FPIs) would be permitted to operate in IFSCs without undergoing any incremental approval process. To compete with other global financial hubs, several tax incentives have been offered to IFSC participants, as well as to nonresident investors and business partners. Minimum alternative tax is payable at a reduced rate of 9%. To promote the relocation of foreign funds to IFSCs, the Indian Finance Act, 2021 introduced a scheme, with effect from April 1, 2022, for the relocation of Alternative Investment Funds in India. A large amount of these AIFs lie outside India and the objective is to get the India centric Alternative Investment Funds to IFSC.

Another area of good business development which can infuse global trade and financing is the aircraft leasing and financing at IFSC. This business can also translate into billions of dollars of business. IFSCA has managed to attract various foreign banks in different versions. The budget has approved of giving tax advantages to the investment division of these foreign banks. GIFT IFSC can also become a preferred listing destination.

These are some of the areas that IFSC is planning to capitalise on in order to make India a global hub for financial services transactions.

Tax incentives for GIFT City IFSC

The government of India has been introducing various measures to strengthen the regulatory framework of GIFT City. GIFT City is the dream project of our Honourable Prime Minister, Mr. Narendra Modi and is set to become the first operational smart city of India. House to the first and only IFSC of India, GIFT City is the next preferred business destination.

GIFT City offers an ideal environment to do business. GIFT SEZ is a special area within the city which offers various advantages for conducting business activities. SEZ aims to boost the economy by exporting goods and services. GIFT City has been established to facilitate business in banking, finance, insurance and IT and ITES. SEZ, however, is an area designated in Gift city where one may set up units to carry specific manufacturing and trading activities and provide certain services.

GIFT City offers 5 major tax benefits:
-100% tax exemption
-9% Minimum alternate tax
-GST and customs duty for imports in SEZ exempt
-4% TDS on interest on overseas borrowing
-Long term capital gains tax and stamp duty exempt (Source:https://incorpadvisory.in/blog/tax-incentives-announced-in-budget/)

GIFT city has a lot of economic and fiscal advantages. It has been meticulously planned and structured to lure foreign investors and institutions. The government has introduced various reforms in every budget over the last few years to boost GIFT city.

Model house on a financial graph high quality and high resolution studio shoot

Ahmedabad is India’s most affordable housing market

Pandemic had hit every sector hard, including real estate. The sector did witness a low for sometime, but in no time, people realised the importance of bigger and improved houses and that was a push to the real estate market sentiment. However, the two recent hikes in repo rate by RBI amounting to 90 basis points has decreased the home purchasing ability of people by 2% on an average across markets.

Despite the hike, however, markets remain largely affordable. Positive sentiment towards home ownership is giving the required boost. The good news is that among the top 8 cities, Ahmedabad has emerged as the most affordable housing destination based on EMI to income ratio for an average household. The ratio for Ahmedabad stands at 22%, according to Knight Frank Affordability Index.

Faster approvals , ample floor space index, robust transport system has led Ahmedabad to be consistently featured amongst the affordable cities since 2019.

Among the remaining top five cities, Kolkata was the next most affordable at 27 per cent in the index for H1 2022, followed by Bengaluru (28 per cent), NCR (30 per cent), Hyderabad (31 per cent) and Mumbai (56 per cent).

The GIFT SEZ Advantages

What is a Special Economic Zone (SEZ)?

As the name suggests, a Special Economic Zone (SEZ) is a specified area in a country which has different laws pertaining to business and trade, as compared to other parts of the country. SEZs are created in order to cater to rapid economic growth. The laws and regulations in such zones trigger Foreign Direct Investments (FDI), which further contributes to infrastructure development, which then leads to generation of additional economic activity and creation of employment opportunities. In the year 2005, the Government passed the SEZ Act, 2005 supported by SEZ Rules, 2006. SEZs provide easy access to global trading hubs that facilitates the flow of capital and movement of goods. These are critical for success of an SEZ. SEZ also offer well-developed areas of infrastructure with built up space, power, water supply, transport, housing etc. along with physical and social infrastructure facilities.

GIFT City Gandhinagar SEZ

Gujarat International Finance Tech-city (GIFT) SEZ is India’s first International Financial Services Centre (IFSC) under Special Economic Zone Act, 2005 (“SEZ Act 2005”). GIFT IFSC is a Multi Services Special Economic Zone with 105 hectors of land. GIFT is being designed as a global Financial and IT Services hub, which aims to be at par or better than the global financial centres at Tokyo, Shanghai, London amongst others. IFSC at GIFT SEZ has been developed to realise the vision of the India Government to emerge as a major economic power.

Advantages of GIFT City Gandhinagar SEZ

Competitive cost of operations
Favourable tax regime
Single window clearance
Increased FDI
Boost in economic activity
Employment generation
Infrastructure development

Yash Brahmbhatt

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