Under its Smart Cities Mission, Indian Government wants to create cities that are technologically equipped and have energy-efficient buildings. An energy efficient building offers suitable environment for offices and housing with minimal energy consumption and wastage of energy, thus minimizing energy. It offers best-in-class facilities, and efficient transportation system. The first such model city, is getting ready in Gujrat. Its work is in progress, it is called Gujarat International Finance Tec-City Co. Ltd or the GIFT City. This smart city is being developed as a central business district in Gujarat’s capital Gandhinagar. The Rs 78,000-crore project would provide residential, corporate, retail, and other facilities.  At the core this project is technology driven to ensure transport connectivity, resource management, water distribution, and even waste disposal management. It will also house India’s first International Financial Services Centre (IFSC).

GIFT City aims to be a ‘smart city’ for India’s growing finance and technology sectors. It hopes that a promise of ‘intelligent design’ and the most modern infrastructure including gas, electricity, and transport will attract businesses from other parts of India as well as overseas.

The idea of GIFT City was planned back in 2008 and became operational in 2015. The simplified regulations bundled with various tax and other advantages offer an inviting ecosystem making it a promising destination for both local and global investors. With a specific attention on financial services, it also becomes a promising landscape for both domestic and international financial giants. It provides distinguished benefits to the financial, IT/ ITeS (Information technology enabled services) companies making it a pivotal foundation at par with the various global financial and IT hubs. GIFT City is a vision of the Government of India and Gujarat aiming to serve as a centre for global banking, trade, and business.

An IFSC is a specific location within the mainland of the country treated as a foreign location with an intent to enable global business offering a worldwide regulatory regime. IFSC at GIFT City gives an opportunity to global and domestic businesses to set up a company, limited liability partnership and subsidiaries in the GIFT City under various business verticals. These include banking, insurance, stock exchange, alternate investment funds, aircraft leasing and other businesses as well such as ship craft leasing, etc. The Gift City will be giving Unified Regulator & Single Window Clearance.

IFSC in India are governed by a unified regulator named IFSC Authority (IFSCA) which encompasses regulatory powers of four financial services regulators in India namely Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory Development Authority of India (IRDAI), Pension Fund Regulatory & Development Authority of India (PFRDAI) enabling it to provide single window clearance for all necessary approvals under one umbrella in an easy manner.

GIFT City is declared as Special Economic Zone (SEZ). The SEZ is created to encourage exports and foreign investment especially for multinational corporations. SEZ offers benefits to the businesses operating in this zone, including duty-free imports and exports, easy regulatory processes, tax benefits. GIFT City is the first IFSC in India and to make it more attractive and enticing the Government of India also declared it as a SEZ.

GIFT IFSC has been designated as a foreign jurisdiction of a non-resident zone under the Foreign Exchange Management Act (FEMA) Regulations enabling friendliness for carrying out foreign exchange transactions in liberal manner. The entities setup in the GIFT IFSC can transact in, retain, repatriate the foreign currencies without limitations which are otherwise applicable to the mainland India.

Easy movement of foreign capital

The offshore status of the GIFT IFSC bundled with various relaxations and less restrictive financial regulations makes it an attractive destination for foreign investors allowing unrestricted movement of fund invested in the form of repatriation of profits, dividends, and investments back to the home country of the foreign investors.

Liberal policies and business friendly regulatory framework

The regulatory regime of GIFT IFSC is formulated to parallel the best practices accepted globally facilitating flexibility and reduced compliance burden. Amongst the plethora of such benefits a few noteworthy relaxations include exemption to non-residents from obtaining permanent account number (PAN) or filing return of income in India in certain circumstances.

Tax benefits to the IFSC Units setup in GIFT City

The IFSC units’ setup in the GIFT City, India offers various tax benefits like exemptions on corporate tax, tax holiday for ten years, reduced Minimum Alternative Tax (MAT) for increasing the profitability and hence growth of the business houses. It also offers numerous indirect tax benefits such as no Goods and Service Tax (GST) on services received by unit in IFSC, no GST on services provided to IFSC units / SEZ units / offshore clients. If the services are provided to the Domestic Tariff Area of mainland India, then the GST is applicable under Reverse Charge Mechanism.

Tax benefits to the Investor investing in IFSC GIFT City

The investor investing in the GIFT IFSC gets numerous fiscal benefits including the benefits such as interest income paid to non-residents on money lent to IFSC units in GIFT city are exempted from tax, transfer of specified securities listed on IFSC exchanges by non-residents are not treated as a transfer and  hence gains arising from such transfers are not treated as capital gains and are taxable in India , exemption from Securities Transaction Tax (STT) , exemption from  Commodity Transaction Tax (CTT), dividend received by investor in IFSC unit is subjected to concessional rate of tax, no GST on transactions carried out in IFSC exchanges.

Various financial benefits and incentives

The Government of Gujarat provides various state incentives in the form of financial incentives support schemes to attract companies and investors to GIFT IFSC. These incentives include grants, subsidies, and reduced operational costs due to OPEX (Operating expenses) support, CAPEX (Capital expenditure) support, employment generation incentives. The government has also announced various state level incentives and subsidies to Information Technology (IT) and Information Technology Enabled Services (ITeS) Companies.

Benefits of GIFT City for startups

To promote the innovation and ideas and entrepreneurship IFSC-GIFT City provides dedicated FinTech support and requisite startup friendly environment with an aim to shape and fulfil the aspirations and ambitions of start-ups and entrepreneurs.

Conclusion

The Government of India recognizes and reinforces that tapping the global capital and global market are the key drivers for the development of businesses across the borders and plays a pivotal role in the overall economic growth and to strengthen the position of the country in the global economy.

Globally, we see such cities at Aladdin City, Dubai, South Korea, Abu Dhabi, and Saudi Arabia.

Dubai has setup on a stellar commercial project at Aladddin City that will recreate the magic of the renowned Disney’s Aladdin series. Spread across 4,000 acres, the project will boast of suspended golden walkways and three main towers that will be designed like genie lamps. The city, to be built on the Dubai creek, will house hotel and commercial spaces with ample parking space. It is also in the race of being named as world heritage site by the United Nations Educational, Scientific and Cultural Organization.

Songdo International Business District at South Korea is being built on a reclaimed land near South Korea’s Seoul, the estimated cost of this project is $40 billion. This is a 10-year development project, which will be a business district with 80,000 apartments, 50 million sq ft of office space and 10 million sq ft of retail space, along with hospitals, hotels, schools, and cultural amenities. It will house Northeast Trade Tower, the tallest tower in the country, and Incheon Tower, an under-construction 151-floor twin tower. The city is smart in many ways, as it will provide charging stations for electric vehicles and automatic waste collection system. All the buildings in this city will be built on a par with LEED (Leadership in Energy and Environmental Design) requirements.

Yas Island at Abu Dhabi is being built on a man-made island, the city of Yas is being transformed into a business, entertainment, shopping, and leisure destination by Aldar Properties. The project is expected to cost over $40 billion and will occupy over 2,500 hectares, 1,700 hectares of which will be reclaimed land. The world-class entertainment activities will include a Formula One racing track by Etihad, Ferrari World, Marina Circuit, Yas Water world and Abu Dhabi Grand Prix, along with many restaurants. The Water world and Marina Circuit will provide a wide range of motor sports. 

Oil-rich Saudi Arabia has been slowly expanding into the petrochemical and refinery business district. After building the first Jubail Industrial City project, the Kingdom is expanding the city further by spending $80 billion. The industrial city is known to be one of the largest civil engineering projects and will house many industrial plants and an oil refinery that can produce 350,000 barrels of oil in a day. It will also have a desalination plant of 800,000 cubic meters in volume. The city will also be well-connected with roads, rail tracks and even highways. The project is expected to be completed by 2024. 

The Hudson Yards project, located in the West of Manhattan, is being developed over an operational train yard. The project, which is a joint venture between New York City Department of City Planning and Metropolitan Transportation Authority, will be a 17-million square feet mixed use project boasting of commercial, residential, retail and leisure development. The project will also have its own subway stop. The first commercial tower, which has already locked in global brands, including Coach and L’Oreal as tenants, is 52-storeys high. The entire project is expected to cost over $20 billion.

From FY18 onwards, India’s won’t have a Five Year Plan; instead it will be replaced by a long-term vision document that would incorporate the priorities and direction that the Centre and states to take the country over the next decade and half. Will that work? Abandoning the old concept of five-year plans that India has been following since 1951, the National Institution for Transforming India (NITI) Aayog has decided to come up with a 15-year vision document in tandem with global trends and economic growth. The main aim of the 15 years long vision statement is to end poverty in all forms.

As the country moves towards an entirely new regime of long-term planning, and end of 5 years planning coming to an end in 2018, things will change drastically as planning commission was treated as financial hub of all major economic activities. The new National Institution for Transforming India (NITI) will act more like a think tank or forum, in contrast with the Planning Commission which enforced five-year-plans and allocated resources to hit set economic targets. NITI includes leaders of India’s 29 states and seven union territories. The Prime Minister is the chairman of the Ayog.

In 2025 India will be the world’s most populous nation, with a population of just under 1.5 billion, a little ahead of China. Gandhiji’s famous statement that “India lives in her villages” will remain true with under 40% of the population in urban areas. Agriculture will remain the foundation of employment with over 40% still dependent on it even as its share of economic activity continues to shrink. India’s integration with the global economy will be even higher with trade in goods and services accounting for nearly two-thirds of GDP. The average Indian will consume over four times the power she does today. Internet users will account for anywhere between 50% and 80% of the populace. The market for passenger cars will be around 7.2 million a year, currently the size of the US market. Over 320 million people will travel by air within the country each year, meaning nearly a million Indians will take to the skies each day.

I think that “New India” description should work faster in the rapidly changing global economy. But the narrative is challenged by many socio economic lobbies.  While we acknowledge India’s some achievements such as fostering democracy in spite of large cultural diversity, and economic growth these get nullified by its bureaucratic structure, widespread corruption, poor leadership, risky social divisions, religious extremism and internal security threats. Religious tension is over growing of late, which needs measures to curb.

Rapid urbanization has its side effects, such as starving the rural economy of skilled labor, fuelling unsustainable growth in urban densities and pressuring natural ecosystems. The International Governmental Panel on Climate Change’s fifth assessment report concludes that human economic activity is responsible for the catastrophic rise in greenhouse gas emissions. Over the last five decades, we have destroyed close to 50 per cent of the nation’s flora and fauna and are wiping out freshwater sources. Growth without a fundamental understanding and concern for the natural environment is simply not an answer to progress.

The Indian growth story is showcased in some of the schemes made by Prime Minister Shri. Narendra Modi: the 175 GW solar mission, the Swachh Bharat campaign, Jan-Dhan, Aadhar, Mobile (JAM) trinity, farmer insurance, Make in India, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Digital India, Smart Cities Mission (SCM) Goods and Services Tax (GST) which is a tax reform intended to benefit consumers. Though, at the moment nations is experiencing some hiccups in getting used to the new tax reform. All of these changes have collectively set the tone from a perspective of balanced growth; the think tank needs to look closely at the balanced growth now.

While Make in India is highly appreciable, can we afford to pollute our water bodies, forests, landscapes and air? Instead, why don’t we ensure that India becomes the preferred destination for efficient and pollution-free manufacturing? I think India has a great potential to become a global research and development hub why don’t we work on it?

India is in true sense a melting pot for cultural diversity which has phenomenal strength, the culture of In India is the way of living of the people of India: language, history, religion, dance, music, cuisine, architecture, and customs differs from place to place within the country.

It’s sad that we are yet to realize the strength of our diverse cultures, such as Indian religions, philosophy and cuisine, which has a profound impact across the world. We need to boost confidence of our artisans in handicrafts in micro and village industries. Lack of access to the right markets, absence of market intelligence, absence of micro finance lead to quality issues and mismatch between products and demand for rural artisans in our country.

Millions of Indians still depend on indigenous modes of production, traditional skills and techniques to make a living based on handmade products. These craftspeople and artisans are the backbone of the non-farming rural economy. Music, art, handicrafts, heritage, cuisines etc are boosters for tourism. We need robust tourism policies. By analogy with biodiversity, which is thought to be essential to the long-term survival of life on earth, it can be argued that cultural diversity may be vital for the long-term survival of humanity; and that the conservation of indigenous cultures may be as important to humankind.

Nation Branding is catching up rapidly. On 71st Independence day India needs some serious thought on its branding: over population, poverty, malnutrition, health, increasing crime rate, illiteracy, corruption, increasing unemployment rate, cross border terrorism needs serious attention. Besides, 71 years old country certainly cannot be considered young anymore……..