Source: This post is based on the article “India’s most GIFTed city” published in Business Standard on 1st September 2021.
What is the news?
India’s first International Financial Services Centre (IFSC) in Gandhinagar seems to be moving up, at least on paper, after delays in land acquisition, infrastructure development snags and political crosswinds.
About IFSC & GIFT
- Promoted as India’s offshore alternative to Singapore, Hong Kong and London, the IFSC is located in an under-development “smart” township called Gujarat International Financial Tec-city (GIFT).
- In April 2015, the then finance minister unveiled IFSC regulations at GIFT city to set in motion the process of laws for setting up tax paradise within India.
- GIFT City was conceived as a public-private partnership (PPP) project so that it could be developed in a fast track mode.
- India International Exchange, the country’s first inter national stock exchange, was inaugurated at GIFT city in January 2017.
|Must Read: What is GIFT City?|
Measures by the government
Govt announced various measures for IFSC:
- The nature of financial services set up at GIFT IFSC required permissions from multiple regulators in India, RBI, SEBI, Insurance Regulatory Development Authority of India, Pension Fund Regulatory Development Authority of India and even, possibly, the Direct orate General of Civil Aviation. In 2017, the government decided that the powers of all these regulators would be vested with a single entity called the IFSC Authority.
- Non-resident Indians trading on stock exchanges in IFSC were spared short-term capital gains tax. The finance ministry also exempted intermediary units from goods and services tax (GST).
- Setting up of the first bullion exchange at GIFT city.
- The RBI permitted the trading of rupee derivatives, which could be settled in foreign currency at stock exchanges located in GIFT city.
- Aircraft leasing, another big source of foreign exchange out-flow, was exempted from capital gains tax.
- In August 2021, the government announced that Indians could trade in select US stocks on American exchanges through facilities in GIFT city.
|Must Read: What is IFSCA?|