Gujarat's GIFT City is working to emerge as a major international financial centre and compete with global hubs such as Singapore, Hong Kong, Dubai and London.
In an exclusive interview with NDTV's Editor-in-Chief Rahul Kanwal on the show 'Walk The Talk', K Rajaraman, chairman of the International Financial Services Centres Authority (IFSCA), said, "The architecture of our financial centre is different from what Singapore or Dubai has done because here the focus is on the India growth story, not as much as doing global financial services."
Rajaraman said the original idea behind GIFT City was to bring back financial businesses that had moved out of India, such as fund management and aircraft leasing.
He said that after Prime Minister Narendra Modi came to power in 2014, GIFT City initially functioned under executive orders issued by domestic financial regulators. However, this did not create enough interest among global investors.
So, in 2019, the government introduced legislation to create the International Financial Services Centres Authority. The law provided GIFT City with a formal legal and regulatory framework.
"At the end of the day, what are global investors looking at? They are looking at whether there is policy stability, there is legal certainty, and there is also tax certainty," Rajaraman said.
Although IFSCA is often described as a kind of "super regulator" for GIFT City, Rajaraman said it is not a completely standalone regulator. Its board includes executive directors from regulators such as SEBI, RBI and PFRDA.
Rajaraman said this structure gives GIFT City a strong connection with India's domestic financial system. He said the city now has a legal framework, tax certainty and regulations benchmarked against global standards.
The discussion also focused on the movement of money into and out of India. Rajaraman said GIFT City itself is not concerned about whether capital is moving in or out. However, the RBI and other domestic regulators decide what kind of money can flow into or out of the country.
He said GIFT City's main focus is to make it easier for foreign investors to do business with India.
According to Rajaraman, GIFT City banks currently have around $44 billion in outstanding external commercial borrowings to India. The fund industry has provided nearly $14 billion through equity and debt. He said nearly $60 billion has flowed from GIFT City into India.
The money flowing out of GIFT City, by comparison, is only a few hundred million dollars, he added.
GIFT City is also preparing to attract companies looking to list their shares. Rajaraman said Indian stock markets are already attractive, and several startups have returned to India to launch IPOs. The option for Indian companies to list in GIFT City was opened only last year. Rajaraman said the first listings could happen sometime this year or by late next year.
Fund management has emerged as one of the important businesses in GIFT City. Rajaraman said around 400 funds have been set up there. These funds have invested nearly $15 billion in India and around $5 billion outside India.
In addition to this, GIFT City is becoming an important source of foreign-currency loans for Indian companies. Rajaraman said Indian companies raised around $61 billion through external commercial borrowings (ECBs) last year, and nearly $20 billion came through GIFT City.
He said fund managers in GIFT City have already raised nearly $20 billion abroad, with a large part coming from HNIs (high-net-worth individuals). Banks in GIFT City have also onboarded around 30,000 depositors, who have invested about $3 billion.
Rajaraman said the focus will remain on Indian businesses and the Indian diaspora for the next three to five years. He also wants to increase the number of NRIs investing through GIFT City from the current few tens of thousands to around one million.
He linked this goal to the Viksit Bharat 2047 vision. He said India currently has around 100 companies with some global presence, which he aims to increase to around 1,000 global champions.
