GIFT City: How PM Modi’s pet project is fast becoming India’s capital gateway

Source: Business Today

“We enjoy working here and it’s largely no different from working in Delhi or Mumbai. But we wish the social life were a little better. There’s not much to do after work,” say Niharika and Seema (names changed on request) who are walking down for lunch at their office cafeteria when this writer bumps into them. The 20-somethings have been working with a foreign bank at GIFT City in Gujarat, for the past one and a half years. “There are a lot of young people like us working here who live in Ahmedabad or Gandhinagar,” they say, and before rushing off for lunch, point towards the hectic construction activity taking place all around.     

If there’s one phrase that can describe GIFT City—spread across 1,000 acres of land and just a 20-minute drive from Ahmedabad’s Sardar Vallabhbhai Patel International Airport—right now, it is furious activity. Work is on at a frenzied pace—residential apartments, a school and even a hospital are being built around offices in steel and glass towers that are humming with people, amid vast expanses of vacant land. Announced in June 2007, Gujarat International Finance Tec-City or GIFT City, one of India’s long-standing ambitions to house an international financial services centre (IFSC) on the lines of the ones in Singapore and Dubai, is ready for take-off.

Considered a pet project of Prime Minister Narendra Modi, it has got a boost from the central government in recent years. Several companies in the financial services space have set up shop in GIFT City, which currently has an estimated 400 offices, where 26,000 people work.     

A key reason for this progress has been the International Financial Services Centre Authority (IFSCA), set up in April 2020 under the International Financial Services Centre Authority Act, 2019. Over the past few years, it has kept a sharp focus on putting in place comprehensive regulations to get the place going and continues to be in discussions with ministries to make the jurisdiction more business- and investor friendly.     

“The establishment of the GIFT IFSCA, integrating Indian financial markets with global financial markets, is part of our larger reforms,” Prime Minister Modi had said at the investor conference Infinity Forum in December, noting that the vision for GIFT City has been crafted as a dynamic ecosystem that will redefine the landscape of international finance. “It will set new benchmarks for innovation, efficiency, and global collaboration. The establishment of the IFSCA as a unified regulator in 2020 is a crucial landmark in this journey,” he had underlined.     

IFSCA Chairperson K. Rajaraman notes that there is a set of foreign investors who are still not directly investing in India. “We would want them to come into a jurisdiction (GIFT City) where they feel at ease in terms of ease of doing business, the quality of the regulations, the clarity of the regulations, tax certainty and so on,” he tells Business Today, adding that this has started happening now.   

The buzz around GIFT City was evident at the recent Vibrant Gujarat Global Summit 2024. The PM, in his inaugural address, announced that the UAE’s sovereign wealth fund will soon launch operations there. As part of the summit, he also took part in the Global Fintech Leadership Forum held at GIFT City on January 10 that was attended by the leadership of 26 prominent companies worldwide, including the likes of Reliance Industries Chairman & MD Mukesh Ambani, Micron Technology President and CEO Sanjay Mehrotra, and ArcelorMittal Executive Chairman Lakshmi N. Mittal.   

Among other investments in GIFT City, Japan’s Mizuho Bank is setting up an IFSC banking unit, while the UAE-based Transworld Group plans to start aircraft and ship leasing. 

Meanwhile, GIFT City MD & Group CEO Tapan Ray said at the summit that ONGC Videsh will set up a finance company for treasury operations, while IT services major Wipro plans to set up tech-fin operations. Accenture, another IT services major, also plans to set up an office there, he added.

At a separate seminar on GIFT City at the summit, Union Finance Minister Nirmala Sitharaman said it is ideally poised to be the gateway for a financial and investment hub and will play a significant role in achieving India’s target of becoming a developed nation by 2047. She also announced that the government’s plans to build a diverse fintech laboratory at GIFT City, which it hopes to use as a platform for trading of green credits.