Saturday, January 27, 2018
MNC Banks, Insurance Firms to Move into GIFT City; Targets 1 Million Employment by 2025
Gujarat International Finance Tech-City (GIFT), a joint venture of IL&FS and Government of Gujarat, conceptualised by Prime Minister Narendra Modi has come of age as it finds place not only among the top 15 emerging Global Financial Centres but lately also experiencing growth in terms of large numbers of MNC companies coming in and also increase in its employment to 1 million by 2025.
GIFT City is operational and various financial institutions and IT/ITeS companies are operating from the city. Around 11 banks have been allotted space for their IBUs in the current phase in GIFT IFSC. These include: Federal Bank, Yes Bank, ICICI Bank, IDBI Bank, and Kotak Mahindra Bank have been operational. Going forward the management expect leading MNCs in the banking and insurance sector to take up space.
Talking to the media, Ajay Pandey, Managing Director and CEO of GIFT Ltd says, “Since operation began in 2017. GIFT has attracted over 160 major Indian banking and insurance companies and now 40 odd large MNCs have also expressed interest in the project. Coming months will see these banks starting their operations in GIFT.”
Even though, Pandey did not reveal the name of the new companies, Industry sources indicate that it not only pure banking and financial institution but also IT/ITeS companies focusing on the BFSI vertical who are likely to move in. In addition, many well-known IT/ITeS companies, both domestic and global, have set up their own units at GIFT City, these include MNC giants like Oracle, SIAC, befree, Pioneer Insurance Brokers, Maxim Integrated and many more.
Special Tax Rebates Offered at GIFT City
Tax rebates is another factor why MNCs are heading to GIFT city. The city is a designated SEZ area within its premises that houses India’s first International Financial Services Center (IFSC). The banks and insurance institutions operating in GIFT receive several tax benefits as announced by the Government of India in the previous budget. These include exemption from dividend distribution tax, securities transaction tax, long-term capital gain tax and commodity transaction tax. In addition, for the companies located in IFSC, Minimum Alternate Tax (MAT) is reduced to 9%. This reduction in MAT, which currently is at 18.5%, provides a competitive tax regime to IFSC at GIFT-City. Besides the local Gujarat government of IT/ITeS policy waivers off stamp duty on share broking transactions in GIFT City. “We are the only second city after Jamshedpur to offer these tax reduces, says Pandey and adds that the tax incentives will further boost the development of India’s first IFSC at GIFT City.”
GIFT has also allotted space to institutions like SBI, LIC, BSE Broker’s Forum and Reliance Capital. Bangalore-based developers like Prestige Group, Brigade Group and also Hiranandani, World Trade Centre etc. are developing various facilities in GIFT City.
GIFT to Employ 1 Million Direct and Indirect Employment by 2025
GIFT over the years has not only attracted major companies but also got in a lot of employment in the region. These include large IT companies like TCS employing over 1,000 skilled and semi-skilled IT staff while Oracle employs 150 and so around 7500 people are working within GIFT City and it is expected that over the next few years the employment will reach around 30,000 people.
When GIFT City will be fully operational it will create 10 lakh i.e. 1 million direct and equal numbers of indirect jobs.
“India enjoys significantly lower operational and wage costs as compared to leading business centers like Dubai, Singapore, London and New York. It has a large pool of individuals with professional and technical skills owing to its demographic dividend. Moreover, we produce the finest brains in the finance sector. IFSCs at London, Dubai, New York, and Singapore incidentally have a large number of Indians managing complex transactions and leading financial innovations,” concludes Pandey.