GIFT City: India’s Global Financial Hub

Gujarat International Finance Tec-City (GIFT City) represents a pioneering initiative to create a globally recognized business district in India, designed to cater to international financial services and technology firms. Strategically located between Ahmedabad and Gandhinagar, GIFT City is India’s first operational smart city and home to its first International Financial Services Centre (IFSC). This ambitious project serves as a unique model for the future of India’s global financial market and investment landscape.

Key Features of GIFT City

1. Smart City Infrastructure

GIFT City covers 886 acres of land, divided into two zones:
Special Economic Zone (SEZ), designated for IFSC activities
Domestic Tariff Area (DTA), catering to domestic enterprises
It aims to support a “walk-to-work” concept with residential, commercial, and social infrastructure, including hotels, hospitals, and schools
The city boasts 63 million square feet of development rights, with 11.89 million square feet currently under development
Green City Initiatives: It is designed with sustainability in mind, having 200 planned green zones with a high tree density per hectare

2. GIFT City’s Financial Ecosystem

Banking Sector: GIFT City offers services like wholesale, corporate, retail banking, trade finance, and loan syndications. It hosts 12 foreign and 16 Indian banks, making it a critical financial hub
Capital Markets: GIFT City houses two operational exchanges, INDIA INX and NSE. It provides new avenues for Indian companies to raise foreign capital with globally benchmarked regulations
Funds Industry: GIFT City supports Registered FMEs (Retail & Non-Retail) and Authorized FMEs
Insurance and Re-insurance: IFSCA Insurance Offices (IIOs) offer direct life, non-life, health, and re-insurance services. The regulations are aligned with global standards for enhanced competitiveness
Aircraft Leasing: With a supportive policy and regulatory framework, 30 lessors are registered, leasing over 120 aircraft, helicopters, and engines. Major players like Tata and Indigo have set up operations here
FinTech Innovation and Regulatory Sandbox: GIFT City fosters fintech innovation through direct and limited-use authorization, supported by partnerships with angel investors, VCs, and regulatory cooperation
Sustainable Finance: GIFT City is building a sustainable finance hub, with globally aligned regulations for ESG debt securities and the launch of an international sustainability platform by NSE-IFSC
Indian International Bullion Exchange (IIBX): IIBX offers a transparent platform for bullion trading using depository receipts.
Foreign Universities: Foreign universities can establish International Branch Campuses (IBC) or Offshore Education Centres (OEC)
Global In-house centres (GICs): Global organizations can set up their GICs at GIFT city for providing support services, directly or indirectly, to entities within its financial services group

Professional Services Providers:

Ancillary Service Framework: GIFT City provides legal, compliance, secretarial, and consulting services, supporting a wide range of professional and management operations
IFSCA (Bookkeeping, Accounting, Taxation & Financial Crimes Compliance Services) Regulation: GIFT City is set to become a global hub for accounting and taxation, offering significant outsourcing opportunities with tax incentives and a regulated ecosystem

3. Unified Regulatory Environment: The International Financial Services Centres Authority (IFSCA) acts as a single-window regulator, overseeing all financial products, services, and institutions operating in the IFSC zone. This simplifies regulatory compliance and improves ease of doing business

4. Liberal Policies and Tax Incentives

Tax Holiday on Business Income for 10 out of 15 years
Minimum Alternate Tax @ 9%
No Commodity Transaction Tax/Securities Transaction Tax/Goods and Service Tax/Stamp Duty
Reduced Withholding Tax of 9% on interest paid on Debt Instruments
Competitive Tax Regime for Funds
Incentive under Gujarat IT/ITes Policy (2022-27)

GIFT City – A boon for foreign residents and NRIs eyeing access to India investments

Exemption from Income Tax Filing: Non-resident investors who earn no other income in India apart from investments in IFSC funds are not required to file Income Tax Returns (ITR) in India
No Foreign Portfolio Investor (FPI) License Requirement: Foreign nationals and foreign institutional investors are exempt from obtaining an FPI license from India’s securities market regulator when investing through GIFT City
Simplified Fund Transfers: Investors can remit funds directly from their foreign bank accounts to the fund’s bank account in the IFSC, eliminating the need to open a bank account in India
No Requirement for PAN: Non-resident investors do not need to apply for a Permanent Account Number (PAN) in India to invest through GIFT City, further simplifying the process
Global Currency Transactions: Investments can be made in global currencies such as USD, ensuring ease of cross-border transactions for international investors
No Demat Account Requirement: Investors are not required to open a Demat account in IFSC-GIFT City, reducing administrative hurdles for investment

Current state of fund ecosystem at GIFT City (Key statistics)

Significant Domestic Investments: Category III funds housed in GIFT City have invested approximately USD 1515 Million into Indian assets
Global Reach: Category III funds based in GIFT City have invested USD 76 Million in foreign jurisdictions, highlighting its role in global financial integration
Expanding Assets Under Management (AUM): The estimated total AUM of mutual funds managed within GIFT City has reached USD 10 Billion, demonstrating its growing influence in asset management
Increasing Fund Management Presence: GIFT City hosts more than 130 fund management entities and 148 Alternate Investment Funds (AIFs), solidifying its status as a premier financial hub

Illustrative fund structure at GIFT City for NRI / foreign investors

Conclusion: The Future of Global Investment in India

GIFT City represents a monumental shift in India’s approach to integrating global financial markets. With its liberal policies, modern infrastructure, and regulatory framework that appeals to both foreign and domestic businesses, GIFT City is poised to be a game changer for investment in India. The ease of capital flow, combined with significant tax incentives and a streamlined regulatory environment, creates immense opportunities for businesses looking to invest or expand in India and beyond.

In the coming years, GIFT City is expected to play a pivotal role in shaping India’s financial future, attracting international investors and positioning India as a global financial powerhouse.

Source – Doing business at GIFT City report by GIFT city authority

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India Growth Fund Aust. Pty Ltd ACN 679 187 994 (IGF) as a corporate authorised representative (CAR: 1313345) of Non Correlated Advisors Pty Ltd ACN 158 314 982 AFSL 430126 (NCA). IGF is authorised to advise and deal in wholesale investors only as that term is defined in the Corporations Act 2001. IGF is only authorised to provide you with general information. Under no circumstances does IGF take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. You are advised to obtain your own investment, financial, tax and legal advice before taking any action. Neither IGF, NCA nor any of their related parties, their employees or directors, officers, provide any warranty of accuracy or reliability in relation to such information or accept any liability to any person who relies on it. You should obtain professional advice and read the Fund’s information memorandum (IM) before making a decision in relation to this product. Any forecasts and hypothetical examples are subject to uncertainty and are not guaranteed and should not be relied upon. Past performance is not a reliable indicator of future performance. The information contained in the presentation are confidential and may not be reproduced in whole or in part. If the content of this publication (and/or presentation) conflict with any terms of the IM, then the terms of the IM govern.

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