Data embassies, EXIM Bank subsidiary to propel business

So, compared to places like Singapore, IFSC will provide a cheaper alternative to many countries that would like to store critical data in GIFT IFSC,” sources in the state government said.

Sitharaman’s announcement to establish a subsidiary of EXIM Bank for trade refinancing is also expected to benefit GIFT City. “This would enable a new line of business for EXIM. It will be able to undertake factoring services for International Financial Services,” Dipesh Shah, Executive Director, Department of Development, International Financial Centres Authority (IFSCA), told The Indian Express.

GIFT City MD and Group CEO, Tapan Ray, echoed similar views. “The far-reaching measures announced in the budget will go a long way in strengthening the ease of doing business in GIFT City’s IFSC.

The establishment of an EXIM Bank subsidiary would encourage emerging sectors such as aircraft and ship financing activities in GIFT City. The setting-up of data embassies would facilitate digital continuity solutions for countries seeking such solutions,” Ray stated.

Infibeam Avenues Ltd, which has a data centre facility at GIFT City, feels that incentivising foreign data centre players to set up their base in GIFT city is a “smart move”. “By offering data embassies at GIFT City for foreign data centre companies, Finance Minister Nirmala Sitharaman has solved their concerns,” stated Vishal Mehta, MD of Infibeam Avenues, while adding that the move will help start “migration of large data centres” to GIFT City.

This is the seventh year the Union budget has provided sops for GIFT City.
To aid “ease of doing business” within GIFT City, the Union Minister also announced delegating powers under the SEZ Act to IFSCA to avoid dual regulation and setting up a single-window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI.

So far, if an entity wants to enter IFSC, it needs to make an application to SEZ as well as to IFSCA. This ends in duplication as both the entities conduct a review of their business plan. Similarly, when an entity tries to set up a base in GIFT City, it needs to apply for no-objection certificates from various authorities. With a single-window system proposed in the budget, the application for NOC now can be made at a single venue.

“The budget announcement will facilitate ease of doing business for the financial services industry by reducing multiplicity of regulatory approvals, compliance and promoting e-governance through single-window IT system,” Shah said. Officials said the budget announcements for “amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act” were also steps towards aiding ease of doing business.

The Union budget announcement about “recognising offshore derivative instruments as valid contracts” is expected to attract more business to GIFT IFSC.

Offshore derivative instruments are investment tools used by overseas investors to get access to the Indian equities and other equity derivatives. Though they invest in India, most of them are based in countries such as France, said sources.

The finance minister in her speech also permitted “acquisition financing by IFSC Banking Units of foreign banks” that will allow IBUs to conduct financing without any restrictions.

The budget also extended the period of tax benefits to fund relocating to GIFT IFSC to March 31, 2025. Currently, GIFT IFSC has more than 390 entities registered across a spectrum of financial services, including banks, capital markets, insurance, Fintech, aircraft leasing and bullion exchange.