The journey of GIFT City and challenges ahead

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It took more than a decade for GIFT City in Gujarat, India’s only international financial hub, to finally materialise with the help of better policies and regulatory clarity. GIFT City’s inception in 2007 saw uncertainties until 2014 when Prime Minister Narendra Modi came to power at the Centre. Approval as India’s first operational IFSC in 2015 marked a turning point, positioning it as a significant contributor to India’s economic growth.

After the establishment of the International Financial Services Centres Authority (IFSCA) in 2020 and the introduction of specific regulations for managing funds in 2022, key businesses in GIFT City have experienced significant growth each year. The IFSCA is a regulatory body that oversees and regulates financial activities within GIFT City.

Businesses like managing funds, stock markets, international banking and leasing aircraft have all expanded notably in GIFT IFSC. More than 200 companies have established their presence in GIFT City, including 19 banking units, 25 insurance companies and numerous brokerages and financial service providers. Key players such as the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and international banks like Standard Chartered, State Bank of India, Dual and JP Morgan have established their offices and operations within GIFT City.

In 2023, when Silicon Valley Bank collapsed, GIFT City came to the limelight and approximately $200 million moved there in a span of few days. This event positioned GIFT IFSC as an alternative on the global stage for international banking.

Trading of SGX Nifty futures at GIFT City via the NSE IFSC-SGX Connect, known as GIFT NIFTY, is set for substantial growth. The daily trading volume for SGX Nifty futures contracts stands at approximately $1.8 billion, significantly surpassing the previous volume of $150 million on NSE’s international exchange within GIFT City. It has attracted more than 80 fund managers with total investments of $2.9 billion across India and overseas.

According to EY, in GIFT City, Alternative Investment Funds (AIFs) have made total investments of approximately $3 billion as of 31 March 2024, with commitments raised amounting to around $8.4 billion. On the other hand, banks have deployed funds totaling $60 billion within GIFT City.

According to Aarti Harbhajanka, Co-Founder & Managing Director at Primus Partners, GIFT City has attracted a significant number of residents, with over 5,000 residential units already occupied, housing a population of around 15,000-20,000 people. The residential population is expected to grow to around 1 lakh by 2025 as more companies and professionals relocate to the smart city.

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