December 22, 2015

GIFT to face competition from proposed Mumbai IFSC

Devendra Fadnavis, Chief Minister of Maharashtra, has set the ball rolling on creating an IFSC district inBandraKurlaCompex (BKC) Mumbai. This IFSC could look to draw global businesses from other global IFSC like Dubai and Singapore and could be a competitor to the GIFT IFSC in Gujarat, India.

A committee headed by Jayant Sinha, MOS Finance, Govt. of India, is preparing a master plan to develop the area. The work on establishing a world class financial arena is expected to begin by April 2016.The financial district of Mumbai already has some of the biggest names in Indian finance viz.

  • ICICI Bank,
  • Bank of Baroda,
  • UTI Mutual Fund, 
  • Deutsche Bank,
  • Citibankand
  • a diamond bourse.

The government is planning to invite industry and finance stalwarts to help it draft the plan and make this long talked about project a reality. In order to achieve the objective,officials of state government have already held discussions with IndianFinance Minister Arun Jaitley to provide some incentives. Discussions have also been held with officials of Reserve Bank of India since RBI will also have to amend some rules for banks as it did in the case of GIFT City.

The broad master plan entails a separate taxation system in BKC. Thiscould mean a complete different rates and process of administering the companies operating out of the IFSC. State government officials are benchmarking the framework for setting up the IFC with GIFT City in Gujarat.Poonam Mahajan, deputy chairperson of the committee expects that once the project becomes operational, it could help in changing the stature of not only BKC, but India as well.

Mahajanstated that other IFSCs like Singapore, Hong Kong and Dubai have benefitted because Indians have been preferringthese locations to set up their companies instead of setting up in India due to taxation issues and the government is trying to remove those tax hindrances to make this IFSC a success.
In the past, there have been many committees which studied and gave recommendations for making Mumbai a global financial centre. But all these recommendations have not resulted in any fruitful action plan. Currently the empowered committee is working on developing the module for BKC and its members include chief secretary Swadheen Kshatriya and Officer on Special DutyKaustubhDhavse.

The proposed development of 60 acres at BKC for International Finance Centre will compete with 110 acres at Dubai Financial Centre and around 320 acres for London's financial district of Canary Wharf. Once developed, the IFC can pose a limited threat to the prospects of GIFT IFSC since Mumbai already is acknowledged world-wide as the Financial Capital of India. It is also possible that both these IFSC help each other’s existence.
Mahajan said that the BKC project would involve mitigating taxation hurdles and also create world class infrastructure. "We are planning to build a Tram system that would be running in this precinct to encourage more people to use this; we could run it for free," said Mahajan.




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