Understanding the potential of GIFT City

At the recent CafeAlt Conference 2024, IFSCA authorities, Dr. Dipesh Shah, ED, IFSCA, Pradeep Ramakrishnan, ED, IFSCA and Pavan Shah, General Manager, IFSCA shed light on the growth of GIFT City, the current stakeholders registered with IFSCA and what can be expected from the future.

Here are the highlights of their session.

Development of IFSC

• Initial days at IFSCA were difficult and full of apprehensions. There were problems in doing overseas transaction due to restrictions and taxes. The speakers credit the Indian govt. for their vision to resolve these teething troubles.
• India’s financial experts and consultants were promoting Dubai, Mauritius and Singapore for investment based on tax benefits and ease of business.
• The belief for IFSC was brought in by the government. The implementation was done with the help of RBI, SEBI, IRDAI and PFRDA who created a lenient regulatory framework for IFSC.
• The step to create a separate, unified regulator within the ecosystem has acted as an enabler for the firms to come in for investment.
• Tax changes have also played a key role. Currently, there is no tax on the business profits at IFSC for 10 consecutive years out of 15 years at IFSC. The Minimum Alternate Tax (MAT) has also been brought down to 9% from 18% a few years ago.

Unlocking the potential of GIFT City

• IFSC has given approval to 700+ organizations out of which 550 were done in the last three years alone. By 2025, there will be over 1000 companies operating from IFSC
• This includes 29 banks across jurisdictions including US, UK, France, Australia and Singapore whose asset size has grown from $14 billion to $62 billion in the last three and a half years.
• 29 insurance companies have also registered with IFSC.
• Gift City also has launched its own index - Gift Nifty, which is currently trading at high volumes.
• 140 AIFs are part of the IFSC ecosystem with at least 10-15 new funds coming in every month.
• Many consultants are now preferring services offered at IFSC over Dubai, Mauritius and Singapore.
• Gift city has emerged as an attractive destination from where money can be funneled into the Indian ecosystem.
• IFSC has seen big success in bonds. There have been almost 100 different issues of bonds, which has raised $60-70 billion.

Fund management and distribution with IFSCA

• IFSCA has focused on three major areas when it comes to fund management: regulation, tax and market participant ecosystem.
• Any fund management entity registered with IFSCA and the regulator can undertake any fund management activity including PMS, REIT, AIF, mutual funds under one license itself.
• Global fund managers involving sovereign funds who are setting up their proprietary funds have started operations in IFSC.
• Active schemes at IFSC aim to collect $38 billion with cumulative commitments in excess of $12 billion. Actual investments have exceeded $5 billion already.
• Tax parity played an important part in attracting global players.
• Distributors also play a key role in development of an ecosystem. Distributors are viewed as intermediaries and are required to be registered with IFSCA.
• They are allowed to distribute GIFT funds overseas and Indian products to the diaspora and foreign denominated products to the Indian residents and globally.
• In the last 8-9 months, 10 large distributors have registered with IFSCA.

You can watch the complete session on Cafemutual's YouTube channel here.