A high-level Indian delegation led by Mr. K Rajaraman, Chairperson, the International
Financial Services Centres Authority (IFSCA) recently visited Sydney and Melbourne in Australia. The visit was aimed at strengthening the ongoing partnership between Australian financial services industry & Universities and the maiden International Financial Services Centre in GIFT City, Gujarat, India. During the visit, the delegation held several engagements with Australian firms, Associations and Financial Sector Regulators.
Government of India implemented a major financial sector reform by establishing and
operationalizing India’s maiden International Financial Services Centre (IFSC) in Gujarat
International Financial Tech City (GIFT City). The vision of the Government is to develop GIFT IFSC as a leading internationally recognized financial centre with best-in-class business regulations, competitive tax regime and ease of doing business. The IFSC is a special international financial jurisdiction, which has been designated as a non-resident zone under Foreign Exchange Management (FEM) Regulations. This status enables transactions to be carried out in notified eleven foreign currencies including AUD.
The Indian Prime Minister, Narendra Modi, during his visit to GIFT IFSC in July 2022 articulated his vision for GIFT City and stated that “the vision of India’s future is associated with GIFT City, which is an important gateway to connect India with global opportunities”. He further stated that “if one integrates with GIFT City, one will integrate with whole world”.
To promote ease of doing business and provide for dedicated regulatory intervention, Government of India through an Act of Parliament (2019) set up the International Financial Services Centres Authority (IFSCA) as a unified regulator for development and regulation of financial markets in the IFSCs in India. From 1st October 2020, IFSCA assumed powers of four domestic sectoral regulators namely Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) & Pension Fund Regulatory and Development Authority (PFRDA), in so far as development and regulation of financial products, financial institutions and financial services within the IFSCs in concerned.
In the last three years, GIFT IFSC has witnessed substantial growth across entire spectrum of financial services activities including Banking, Capital Markets, Insurance, Funds Industry, Aircraft Leasing, Ship leasing, FinTech, Foreign Universities, etc. With internationally aligned regulatory regime, competitive tax structure and beneficial cost of operations, GIFT IFSC is fast emerging as a prominent international jurisdiction for availing wide array of international financial Services. As of July 2024, more than 600 + entities across Banks, Capital Markets, Insurance, FinTech, Aircraft Leasing, Ship Leasing, Bullion Exchange, etc have been registered1 with the IFSCA. Including all entities registered, licenced, authorized and notified by IFSCA. The financial services market is gaining momentum with healthy and growing participation of global and domestic financial services institutions.
According to International Financial Services Centre at GIFT City its key advantages are as follows:
a) IFSC is a separate financial jurisdiction within India, which is treated as a non-resident zone under Foreign Exchange Regulations.
b) The IFSC enables global investors and financial services firms to access India’s large hinterland economy in a more efficient manner.
c) IFSCA has been set up as an agile, unified and dedicated authority for development and regulation of financial markets in GIFT IFSC (ease of doing business).
d) IFSC offers globally aligned regulatory architecture across banking, capital markets, insurance, fintech, aircraft leasing and financing, ship leasing and financing, etc.
e) Access to large talent pool of skilled human resource both in financial and IT sector.
f) The IFSC offers globally competitive tax regime with special tax incentives.
g) IFSC offers beneficial cost of operation viz-a-viz other global financial centres
h) Geo-strategic location of GIFT IFSC allows IFSC to serve different time zones from Japan to the United States of America
Key achievement of phase one according to IFSCA are:
a) Comprehensive regulations (29 Regulations,16+ Frameworks) aligned to international best practices, have been brought out which for banking, capital markets, insurance, funds industry, foreign universities, fintech, aircraft & ship leasing, global in-house centres, etc.
b) A well-developed financial sector ecosystem comprising world-class market infrastructure institutions, fund administration, custodial services, trusteeship services, consultancy services, legal advisory services, wealth advisory services, audit services, international trade finance services platform etc.
c) A growing banking sector comprising of 28 banks (12 foreign banks and 16 Indian banks). ANZ bank has received approval from IFSCA to set up its IFSC Banking Unit. The total banking asset size in IFSC has grown to USD 62 Bn. (June 2024) and the cumulative bank transactions have crossed USD 884 Bn. (June 2024).
d) IFSCA has recently notified (Bookkeeping, Accounting, Taxation, and Financial
Crime Compliance Services) Regulations, 2024 which provides a unique opportunity
for global firms including Australian firms to offer book-keeping, accounting,
taxation, and financial crime compliance services to non-resident clients in an
efficient and seamless manner from GIFT IFSC.
e) Gaining recognition as a preferred destination for India centric funds. Till June 2024, 130 Fund Management Entities have been registered by IFSCA. The FMEs have launched 148 funds (Private Equity funds, Venture Capital Funds and Hedge Funds) with targeted corpus to the tune of USD 38 Bn
f) The insurance and re-insurance ecosystem are gradually picking up pace with 12 Insurance offices and 23 intermediaries now having presence in IFSC.
g) Several measures have been taken to position IFSC as a ‘Global FinTech Hub’. IFSCA FinTech Entity (FE) Framework 2022 and FinTech Incentive Scheme have been notified.
h) Deakin University and University of Wollongong became the first two foreign universities to set up International Branch Campuses in GIFT IFSC. Deakin University has started its academic operations from GIFT IFSC with launch of two master’s Courses.
i) Steps have been taken to development of GIFT IFSC as a Sustinable Finance Hub. Cumulative ESG listing to the tune of USD 12.60 Bn have been listing on IFSC Exchanges.
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