Context

• Gujarat International Finance Tech-City (GIFT City) has emerged as the country’s first Greenfield integrated city which once used to be just a barren land along the Sabarmati River.
• It is India’s first and only International Financial Services Centre (IFSC) where banks, stock exchanges and financial services firms have set up their global operations.

About GIFT City

• Description: GIFT City refers to the greenfield central business district and integrated hub in Gujarat with the promise of world class infrastructure to draw top global players.
  • Spread over 886 acres in Gandhinagar, GIFT City consists of a multi-service Special Economic Zone (SEZ, 261 acres), which houses India’s first IFSC and an exclusive Domestic Tariff Area (DTA, 625 acres).
• Demarcation: The plan is to develop 62 million sq ft of built-up area, consisting of commercial space (67 per cent), residential space (22 per cent) and social space of 11 per cent.
• Evolution: Prime Minister Narendra Modi, back in 2007 as the Chief Minister of Gujarat, conceptualised the idea of GIFT City.
• Long-term vision: PM’s vision was to create a globally-benchmarked financial centre that can compete with the renowned financial centres in London, Tokyo, Shanghai, Paris, Singapore and Dubai.
• Services offered in GIFT City: GIFT IFSC provides services related to capital markets, offshore insurance, offshore banking and asset management, aircraft and ship leasing, and ancillary services.
  • It also does merger and acquisition activities among trans-national corporations, risk management operations such as insurance and reinsurance, Global tax management and cross-border tax liability optimization etc.
  • It houses two international stock exchanges with a combined average daily trading volume of over $11 billion.
  • An international bullion exchange is also going to be launched on 29^th July 2022.
• Smart infrastructure: The social infrastructure in the city includes a school, medical facilities, a proposed hospital, GIFT City business club with indoor and outdoor sports facilities.
  • It also includes integrated well-planned residential housing projects making GIFT City a truly “Walk to Work” City.
  • It is the country's primary functional smart city with a sustainable master layout and world-class infrastructure.

About India's International Bullion Exchange (IIBX)

• About bullion exchange: A bullion exchange allows buyers and sellers to trade gold and silver as well as associated derivatives.
• IIBX description: IIBX will provide for efficient price discovery with assurance of responsible sourcing and quality. It has not only enrolled jewellers to trade on the exchange, but has also set up necessary infrastructure to store physical gold and silver.
• Import gateway: The IIBX shall be the Gateway for Bullion Imports into India
• Regulator: International Financial Services Centres Authority (IFSCA) is the regulator of IIBX.
• Significance of IIBX: It offers a diversified portfolio of products and technology services at a cost which is far more competitive than the Indian exchanges as well as other global exchanges in Hong Kong Singapore, Dubai, London and New York.
  • It will give impetus to financialization of gold across the country and will also empower India to gain its rightful place at the global bullion market.
  • With the launch of IIBX, India would be able to affect international bullion prices as a principal consumer.

Need for GIFT City

• Significance: India being one of the fastest-growing economies in the world needs to expand its economic and strategic activities globally through GIFT City.
• Develop Indian Financial markets: IFSC in GIFT City would provide Indian corporations with easier access to global financial markets and would also complement and promote further development of financial markets in India.
  • It thus enables bringing back the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches/subsidiaries of financial institutions (FIs) to India.
• Promote business sentiments: The pro-business regulatory regime and a conducive ecosystem have made GIFT City an ideal place for investments and over 300 units are already operational in GIFT SEZ and DTA.
• Entry of foreign universities: The Union Budget 2022 opened a new route for setting up of foreign universities in India and freeing them up of 'domestic regulations' through GIFT IFSC.
  • Many Australian, UK and US-based universities have shown an interest in establishing their presence in GIFT IFSC. This will promote 'internationalisation of higher education’ in India.

Regulatory norms in GIFT City

• Unified regulator: IFSCA) has been established as a unified regulator with a holistic vision
  • IFSCA has been set up under the IFSCA Act, 2019.
  • Prior to the establishment of IFSCA, the domestic financial regulators, namely, RBI, SEBI, PFRDA and IRDA regulated the business in IFSC
  • IFSCA will also regulate/ recommend any other financial products, financial services, or financial institutions in an IFSC, which may be notified by the central government.
• Dispute Resolution: Since GIFT City is a hub of international financial services, the International Arbitration Centre has also been set up for dispute resolution on the lines of the Singapore International Arbitration Centre, or the London Commercial Arbitration Centre.

Despite the challenges posed by the Covid-19 pandemic globally, GIFT City continued to attract domestic and international players. In the years to come, GIFT City will be a force to reckon with in the field of financial technology, data security and finance.