The Gujarat International Finance Tec-City (GIFT) will be the first international finance centre in the country and will help bring in at least $50 billion annually from investments, said Ramakant Jha, MD and Group CEO, GIFT City. In an interview with Surabhi, Jha said that he is also in talks with RBI and IRDA to allow transactions in foreign currencies as well as foreign insurers and re-insurers to set up shop in the IFC. Excerpts:
How will the decision by the Sebi board on Sunday help GIFT City?
There are two parts to GIFT City — the domestic financial services centre, for which rules are already in place and the international financial services centre (IFC) which is a special economic zone. Though there was a lot of interest in this by investors but they could not operate in the absence of rules. Now, Sebi has approved guidelines for setting up clearing corporations, stock exchanges and fund houses here. This will help the country as we were losing about $50 billion annually as businesses could not start here.
Apart from the Sebi decision, are you waiting for more guidelines to be notified?
We are hopeful that things will move fast especially since it has been announced in the Union Budget as well. Rules are likely to be finalised by the Ministry of Finance by March 30 and the Ministry of Commerce will also notify them. We are in dialogue with the Reserve Bank of India and the Insurance Regulatory and Development Authority. We have requested the RBI to amend the FEMA rules to allow for transaction in foreign currencies since the IFC will be deemed a foreign territory and banks will be on offshore territory. This has been accepted by the RBI. We have also sought from the IRDA to allow foreign insurers and re-insurers to set up branches in the IFC.
Are you also hoping for tax exemptions for GIFT City?
Yes, for the GIFT City to be successful, it must have a competitive tax regime, otherwise investors can go to other IFCs such as Malaysia, Singapore and Dubai. In line with the Malaysian tax regime, we have proposed that the tax rate should be only 3 per cent for the IFC in GIFT City. In Dubai, there is zero per cent tax. Second, we have also sought an alternate dispute resolution mechanism on the line of that in Singapore and Dubai to ensure faster resolution of legal disputes arising in the IFC at GIFT City.
What are the immediate plans for GIFT City?
We have already signed memorandum of understanding with the NSE and the BSE for setting up international stock exchanges. I think other foreign investors may wait and assess the situation but I expect to start getting some serious proposals in six months time.