The Gujarat International Finance Tec-City (GIFT City) is attracting attention as a prominent financial hub in India. It has been successful in luring international financial institutions, including banks, insurance companies, and asset management firms, to set up operations within its premises.
What is GIFT City? GIFT City, short for Gujarat International Finance Tec-City, is a central business district and an international financial services center under construction in the Gandhinagar district of Gujarat, India.
It is India's first operational greenfield smart city and is designed to be a global financial and technology hub, offering a conducive business ecosystem, state-of-the-art infrastructure, and a commitment to sustainability.
With its robust infrastructure, favorable regulatory environment, and tax benefits, GIFT City is poised to play a pivotal role in shaping the financial landscape, not just in India but globally.
Many countries are working on holding ground in GIFT City, which is India’s financial services center in Gujarat, specifically, Russia.
A few months ago half a dozen Russian institutions were permitted by the Indian capital market regulator to trade as foreign portfolio investors (FPIs) on the local stock exchanges. Recently, three Russian entities are known to have applied for different licenses with GIFT City authorities.
Out of these three entities, two of them would be set up as ‘fund management entities’ and another as a ‘brokerage’. The fund management thing in GIFT is typically an alternative investment fund, a pooled vehicle that can subsequently obtain an FPI license from SEBI. Such an entity can invest stocks and debt listed on the bourses in India as well as in other jurisdictions.
On the other hand, brokerages in GIFT City are largely arms of Indian groups. To encourage the participation of broker-dealers from foreign jurisdictions, IFSCA in December 2020 permitted eligible foreign entities to set up branches of offices in IFSC.
These three entities will have a ground in GIFT City when the International Financial Services Centres Authority (IFSCA) gives them a go-ahead. Once they are approved by IFSCA, these foreign entities will mark the first entry of Russian investors in GIFT City.
What is IFSCA? It is the regulatory body for the Indian special economic zones such as the GIFT International Financial Services Centre (IFSC). It is responsible for regulating and developing financial products, financial services, and financial institutions in IFSCs, with a focus on promoting ease of doing business and providing a world-class regulatory environment.
Why are Russians attracted to GIFT City? Since it invaded Ukraine, Russia has been suspended from the Financial Action Task Force (FATF). To make their way back, large Russian oligarchs and institutions have been searching for new markets and offshore financial centers that aren’t politically hostile. In light of this, a Russian delegation visited the GIFT City to explore business opportunities.
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