Budget 2023: Further boost to GIFT City to make it a global financial hub

GIFT City, which is the country’s first International Financial Services Centre (IFSC), found mention in the Union Budget 2023-24 as the government attempts to provide further impetus to the special economic zone to make it a global financial hub to compete with similar zones in places like Singapore, Hong Kong, Shanghai and Dubai. 

Finance Minister Nirmala Sitharaman, during her Budget speech, announced steps like single window IT system and allowing acquisition finance by branches of foreign banks set up in the IFSC region among other things. 

“Delegating powers under the SEZ Act to IFSCA to avoid dual regulation, Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI, Permitting acquisition financing by IFSC Banking Units of foreign banks, Establishing a subsidiary of EXIM Bank for trade re-financing, Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act, and Recognizing offshore derivative instruments as valid contracts,” she said while presenting the Union Budget 2023-24. 

Industry participants have welcomed the government move and have said that the measures will go a long way in developing GIFT City as a global financial hub while enhancing the efficiency level of the services. 

“It is a fantastic step as it will enable efficiencies in the banking system… It is good both for the banking system as well as the users of the system like borrowers and depositors as they get better rates due to the arbitrage in the currency hedging systems. All banks can take advantage of that even without setting up an offshore branch,” said Sanjiv Saraff, Joint Managing Director, BOB Capital Markets.  

Derivatives have now been allowed as a valid instrument there. It will spur the quantum of transactions at GIFT City. All these are enablers and will help in the overall ease of doing business aspect. India’s GIFT City will emerge as a leading financial hub globally in the near future,” he told Business Today on the side lines of a CII event. 

In a similar context, Divam Sharma, Founder, Green Portfolio, a SEBI-registered PMS said that the single window IT system for all registrations would make establishing GIFT operations seamless.  

“The government is targeting for providing an alternative to countries like Mauritius, Singapore, and Cayman etc by providing a seamless, tax neutral ecosystem. We will see GIFT becoming a financial hub in the likes of Hong Kong over the coming years,” said Sharma.

Also Read: Budget 2023 LIVE updates: FM Nirmala Sitharaman's media briefing to take place at 4pm