The Indian financial sector is all set to go places once the international financial service centre and SEZ at Gujarat International Finance Tec City (GIFT city) are up and running. Not only will companies find it easier to raise funds, but GIFT can also become a hub for offshore trading of stocks and derivatives once the stock exchange to be set up in this centre becomes operational. In an interview with BusinessLine , Ajay Pandey, MD & Group CEO of GIFT, outlines the progress made so far and the road ahead.

Can you give a brief on the tax concessions for companies in GIFT City? Are there are any other regulatory guidelines still pending?

Many tax concessions have already been given to entities operating here. Minimum Alternate Tax (MAT) has been brought down from 18.5 to 9 per cent in the SEZ. For capital market players, securities transaction tax and commodity transaction taxes have been waived. Dividend distribution tax has also been waived. There is no long-term capital gains tax on trades put through exchanges operating in the GIFT City.

For taxation purposes, in the first five years, 100 per cent of the profit is deductible and in the next five years 50 per cent is deductible. And, finally, withholding tax has also been waived.

These are the first set of concessions needed for entities to begin operations. Once banks and other financial institutions begin their businesses, if there are any other concessions needed, we will look into those.

Some of the concessions that have been announced are in line with the global best practices of IFSCs. Everything will not match point to point, but with these concessions, GIFT City is a reasonably good story for people to get started.

Many banks, including YES Bank, SBI, HDFC Bank and ICICI Bank, have opened subsidiaries in GIFT City. What are the activities these banks will be undertaking?

They are helping raise ECBs for joint ventures or wholly-owned subsidiaries of Indian companies. They are also organising buyer’s credit. Earlier, these companies would go to Dubai or Singapore to raise funds but now all of this is happening from India from the IFSC area. This is like an overseas branch for these banks and will function like one.

When do you think the first exchange platform will open for trading? Have any international exchanges evinced interest?

The BSE has announced that it will start the exchange platform in January 2017 along with the Vibrant Gujarat summit. We already have MOUs in place with the NSE and the MCX for their presence in the IFSC. They are also working towards beginning operations but have not made a formal announcement yet about when they intend to start.

We also have an MOU in place wherein the London Stock Exchange plans to associate with us through the NSE.

Primarily equity in non-rupee denominations will be listed and traded here. There could be non-rupee denominated ADRs and bonds are also traded here. Investors from across the globe will be able to trade on these exchanges.

Which Indian companies have been signed up so far in setting up the infrastructure in GIFT City, constructing buildings, roads, power, gas pipeline, etc?

We have a lot of Indian players who are engaged with us. In two important areas we have engaged overseas players — Envac of Sweden has done our automatic waste collection system and we have a cooling system for air-conditioning done by ETA, Dubai.

Apart from these, the entire project employs only Indian companies and contractors. Voltas and Bluestar are some of the names that come to mind immediately.

There are some local construction companies that have been employed too.

L&T was directly involved in building one of the 28 floor towers. There is indirect involvement of various construction companies through projects undertaken by companies setting up businesses in GIFT City. All this offers great opportunities for Indian companies.

What is the entire project likely to cost?

In its final stage of completion in 2024, the entire project is estimated to cost ₹78,000 crore; corresponding to around $11 billion or thereabouts. But that is our investment towards infrastructure and other developers putting up their buildings and outfits. That is a combination of both. As of now we have invested about ₹1,200 crore towards infrastructure.

How is the funding for this capital expenditure going to be met?

The first phase of funds required was around ₹2,000 crore. Of this ₹1,157 crore has been taken from a consortium of five banks and the balance money is through our internal accrual.

Financial Centres such as London, New York, etc, contribute significantly to GDP and employment. What is the GIFT City targeting?

With respect to GDP, I think it is too premature to put out any number. With regard to employment, at its peak, we are hoping to generate half a million direct and another half a million indirect jobs. Over the next three years or so, 40,000 to 50,000 people might be employed.

It is a walk-to-work city. So, those who are working in GIFT will be staying here. There are many who have been transferred to the branches in GIFT City from other parts of the country. Banks and other institutions are also recruiting professionals from all over the country for working here.

We plan to have 25,000 families staying here at its peak. As and when residential apartments come up here, people will begin staying here.

Till then staying in Ahmedabad or Gandhinagar, that are less than 30 minutes away, are also options. Jamnabai Narsee School is already operational here with around 500 students enrolled, who are children of those working in GIFT or children living in nearby areas.

A hospital is also soon to be constructed; so it will be an integrated city.

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