GIFT City's Role in Shaping the Future of Foreign Investment in India

In the last few decades, India has been making progress in becoming a global financial hub, and the development of Gujarat International Tec City has given this progress a significant boost. GIFT City is India’s first IFSC center, which has attracted multiple large financial and banking hubs to its campus.

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As a result, K Rajaraman, the Chairperson of the International Financial Services Centre (IFSC), has shared his remarks at the one-day meeting on International Arbitration Centre and Developing an Alternative Dispute Resolution (ADR) held at the GIFT City, “GIFT City has gained confidence among foreign investors as it is a foreign territory where the Foreign Exchange Management Act (FEMA) is not applicable.”

K Rajaraman, a former IAS officer, also shared some statistics that the IFSC has witnessed “155 registered investment funds.” He also added that setting up the ADR in GIFT City is challenging as the competition is very high with the other financial centers with a history of trade and commerce of 50+ years.

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The IFSC Chairperson, Rajaraman, also highlighted the immense potential for legal professionals in the International Financial Services Centre (IFSC). He emphasized that the IFSC presents a unique opportunity for the legal industry to have a global impact. GIFT City, as part of the IFSC, operates as a foreign territory exempt from the Foreign Exchange Management Act (FEMA), providing foreign investors with a sense of confidence due to the absence of restrictions on capital movement and profit repatriation. 

In contrast, the domestic legal landscape faces limitations on job creation, business opportunities, and reciprocity, hindering the entry of legal professionals. The IFSC presents an environment free from these constraints, offering a promising jurisdiction for legal practitioners.

The concept originated around 20 years ago during Prime Minister Narendra Modi's visit to Singapore. At the time, Modi was the chief minister of Gujarat. During his visit, he was in the company of Indian friends who were engaged in India-focused business activities from outside the country. 

This prompted him to question why they were not operating within India. This experience sparked the idea of creating an ecosystem to facilitate the return of these businesses to India. This vision aimed at bringing back offshore operations to onshore locations.

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In 2019, under Prime Minister Modi's leadership, the government passed the International Financial Services Centre Authority Act. This act will serve as the foundation for the establishment of an international arbitration center.

Bottom Line

GIFT City represents the next evolution in India’s quest to become a global financial center. Its world-class infrastructure, innovative regulatory framework, tax incentives, and thriving financial ecosystem inspire confidence in foreign investors looking for growth opportunities in emerging markets. 

By aligning itself with global standards and fostering an environment conducive to business and technological innovation, GIFT City is set to be a key player in the international financial landscape for years to come.

For foreign investors, GIFT City offers a strategic gateway to tap into India’s growth potential while benefiting from a business-friendly environment designed for global success.

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