Even as Chief Minister Devendra Fadnavis continues to push the plan for an International Financial Services Centre (IFSC) in Mumbai, his government is also readying a plan-B, should the centre not materialise.
According to high level sources in the government, the alternative proposal being considered is of setting up a ‘commodity exchange’ in the Bandra Kurla Complex as an extension to the existing Special Economic Zone (SEZ) at the Multi-Modal International Hub Airport at Nagpur (MIHAN).
While the IFSC plan has been the CM’s pet project, Union Finance Minister Arun Jaitley had dealt it a blow on December 22, when he said on the floor of Parliament that the Centre could think of it only after the IFSC being developed at the Gujarat International Financial Tech City in Gandhinagar had been used optimally. Replying to a query raised in the Lok Sabha, Jaitley had said, “There is a limit on how many IFSCs one could have. Since the first IFSC is being developed at (Gujarat International Financial Tech City) in Gandhinagar, one can think of another IFSC only after the one at the GIFT is optimally used. The Maharashtra government is lobbying hard for an IFSC at Mumbai’s Bandra Kurla Complex (BKC). However, if we make too many IFSCs, then they may not be used optimally, so we can think about the future only after the IFSC at GIFT is used optimally.”
Put in a tight spot, Fadnavis, who immediately came under attack from the Opposition in the state, had rushed to meet Jaitley the very next day to convince the latter to alter his stance. Following this meeting, Mumbai BJP chief Ashish Shelar declared that the Mumbai IFSC plan was still on. While the CM has chosen not to publicly speak about the issue, sources close to him claimed that he was still hopeful that the Centre would consider the request for an IFSC in the commercial capital.
The sources also confirmed that the ‘commodity exchange’ plan was being considered as an alternative. Admitting that the alternative proposal can’t offer the same level of services provided by an IFSC, a highly placed source said “it can serve as an entry-level measure”.
“It will allow free trade of commodities to investors of the MIHAN SEZ. Global rating agencies already recognise Mumbai as the country’s top financial services centre. We have the best ecosystem to promote such activities. Once we build the necessary infrastructure, we are confident that the Centre would come around,” said the source.
The original plan was to build an independent financial services SEZ in the BKC. This had first run into rough weather, when it was found that it does not meet the requirement that a contiguous plot of minimum 50 hectares was needed for the SEZ. Maharashtra has approached the Centre for relaxing this condition citing the land crunch in Mumbai, and has argued that it could make up for it with enhanced buildable rights.
As for the plan-B, authorities pointed out that the MIHAN SEZ, already functional, was spread over 1,597 hectares. “While several leading IT companies, pharmaceutical firms, and aeronautical manufacturing companies have already invested in the SEZ, it does not have an indigenous commodity exchange. Since SEZ rules do not specify geographical boundaries for such a commodity exchange, locating it in Mumbai is feasible,” said a source. The plan-B “is a watered down version of the original plan”, admitted an official.