What is GIFT City?
What does GIFT stand for?
The GIFT city is one of the most exciting projects under construction in the Ahmedabad region of Gujarat. But what does GIFT stand for?
It stands for Gujarat International Finance Tec-City. This futuristic project is expected to be the largest business centre in India and will be built on the foundation of sustainability. This dream city will offer a nurturing environment to establish a global financial and technology hotspot.
GIFT City’s Vision
GIFT City, a futuristic project in Gujarat’s Ahmedabad city, is expected to be India’s largest business and technology hub. GIFT City’s vision is expected to become the leading arena for finance and technology on a global scale.
The formation of GIFT City is an opportunity to drive initiatives towards offering a financial ecosystem to help businesses grow.
GIFT City is considered a promising work of national importance and will become a core part of the country’s expansion in terms of business and trade.
Recent News and Updates on GIFT City
GIFT City in the Headlines
As per the Global Financial Centres Index, Gujarat’s GIFT City has improved its position from 75 to 67 in 2023. MD & CEO of NSE International Exchange, V Balasubramanian, stated that GIFT City was in the nascent stage of development.
However, in the past three years, this promising fintech and innovation hub has made significant headways to be among the most beneficial investments around the world.
Approximately $41.2 billion is the entire banking assets size in the GIFT IFSC, with banks doing cumulative transactions totalling $508 billion. These unique developments led the GIFT City in the headlines.
F1 Track in the Pipeline (March 2024)
GIFT City is planning to be an international sporting destination; thus, the process for the F1 track has been started in this pipeline.
With the hands of architect Hermann Tilke, GIFT City is exploring the possibility of laying down the Formula One track.
Also, the city believes that by 2036, India will have the Olympics within GIFT City. This can be considered as one of the latest developments in GIFT City.
Boost for Fintech Innovation (February 2024)
The Asian Development Bank (ABD) has authorised a loan of $23 million to fund fintech education and innovation efforts in GIFT City, ensuring the latest developments in GIFT City.
This initiative will boost and incubate fintech startups and drive research in the sector. This way, a healthy fintech ecosystem will be created in the GIFT City.
LIC Establishes International Business Centre (February 2024)
The Life Insurance Corporation of India (LIC) has inaugurated its International Financial Services Centre (IFSC) in GIFT City.
This collaboration will offer shelter to different insurance and intermediary companies in addition to banks, fintech organisations, and other ancillaries, thereby allowing the latest developments in GIFT City.
Healthcare Collaboration (February 2024)
Among the latest developments in GIFT City is the announcement of the joint efforts of Lilavati Hospital and Mayo Clinic to increase the standard of patient care in India.
This collaboration is a crucial step towards improving patient safety by applying top-notch methods within the hospital’s operations and increasing medical competence, operational productivity and overall quality of patient care and treatment.
Purpose, Goals and Development of GIFT City
GIFT City Master Plan
Also known as Gujarat’s International Finance Tech-city, GIFT City is located along the banks of the Sabarmati River in the state of Gujarat.
It is a joint venture between IL&FS and the Government of Gujarat.
In 2007 the idea of GIFT City was proposed in the year 2007 by the then Chief Minister Narendra Modi, the current Prime Minister of India.
The foundation stone of the project was later laid on 28th January 2011. The first phase of the GIFT City project was completed in 2017 when two towers were constructed: GIFT One and GIFT Two and ten buildings. Under the Special Economic Zone SEZ Act of 2205, the GIFT project will be a part of it.
The project is spread across an area of 886 acres and is created as a city within the Ahmedabad region with best-in-class infrastructure. This includes water treatment, a dedicated power plant and an underground utility tunnel.
World-Class Infrastructure
This plan promotes cutting-edge infrastructure like high-speed telecommunications networks, reliable electricity grids, and top-class transportation systems.
This enables continuous communication and allows for smooth commercial operations throughout the city.
Disaster Management Preparedness
This master strategy recognises the value of disaster preparedness.
It includes actions to reduce the hazards connected with natural catastrophes such as earthquakes and floods. This protects the safety and well-being of all inhabitants and enterprises in the city.
Completion Timeline of the Project in Gift City
Phase I Progress
According to the website of GIFT City, the first phase focuses on developing the sprawling 886 acres of land.
The first phase of GIFT City further includes the Special Economic Zone (SEZ) which ensures the completion timeline of the project by 2025.
The latest updates on GIFT City’s first phase as of March 2024 is that there has been significant operational progress with the set of various functional institutions, infrastructure and commercial spaces.
Phase II and Beyond
The GIFT City project’s second phase intends to increase the development area to 20 million square feet.
This phase is scheduled to be finished by 2030 and will most likely concentrate on more residential areas, commercial development and recreational facilities.
Furthermore, the state government intends to develop another 2,300 acres of land, dubbed as GIFT Global City. Since many of the initiatives are still under construction, the completion timeline of the project is yet to be revealed.
Continuous Evolution
The GIFT City is an ongoing project that has high expectations of becoming the leading global financial centre encompassing various large-scale or medium-scale companies, commercial spaces and offices; since it is still under construction, you can look out for the latest initiatives and new projects on the official website of GIFT City, along with the completion timeline of the project.
This constant evolution guarantees that GIFT City is adaptive and meets the changing demands of the global financial and technology ecosystem.
Location and Infrastructure of GIFT City
Geographic Location
When it comes to geographical location, the GIFT City positions itself centrally in the state of Gujarat, along the banks of the Sabarmati River, between the main cities of Ahmedabad and Gandhinagar.
Total Area and Population
The GIFT City is spread across 359 hectares (886 acres) of land. In this development area, the Special Economic Zone (SEZ) constitutes 106 hectares (261 acres).
Since the project is still under construction, the total area and population data within the GIFT City might vary.
With the recent redevelopment proposition by the Government of Gujarat for the GIFT City, the eventful population is expected to be 500,000.
It is also a possibility that in the next 15 years, this business city will be expanded to 3,430 acres and will create more residential spaces and recreational amenities along with riverfront developments.
Weather Conditions
The weather conditions in GIFT City are generally hot and dry during the summer, with temperatures rising over 40 degrees Celsius. Winters are relatively mild, with average temperatures ranging around 20 degrees Celsius.
Operational Framework of GIFT City
Regulatory Regime
Gujarat International Finance Tec-City Authority (GIFTCA) regulates the overall functioning of the GIFT City. It guarantees that GIFT City follows worldwide best practices while being a tax-efficient jurisdiction.
With such a tight regulatory regime, GIFT City offers access to India’s huge and diverse market. It is the only SEZ area that offers both business and residential facilities to people.
Since GIFT City has SEZ status, one can get various incentives, including tax benefits. Alignment with International Standards:
The IFSCA regulations are rigorously created to be consistent with worldwide standards established by organisations like the Basel Committee of Banking Supervision and the International Organization of Securities Commissions.
With such a regulatory regime, GIFT City ensures uniformity and transparency in all companies.
Jurisdictional Autonomy
Under the Special Economic Zones Act of 2005, GIFT City is also designated as a multi-service SEZ. Under this jurisdictional autonomy, businesses operating in GIFT can get various advantages:
- Simplified customs procedures
- Duty-free import of raw materials and capital goods
- Relaxed foreign exchange regulations
Tax Relaxations for SEZ Units
Within the SEZ jurisdictional autonomy, the units can seek various tax benefits like reduced GST prices, income tax deductions and exemptions from customs duties.
Labour Law Relaxations in SEZs
Compared to mainland India, the labour rules in the jurisdictional autonomy of SEZs are simpler. It has a single point of contact with speedier dispute resolution systems in place.
Foreign Exchange Regulations in SEZs
Under the jurisdictional autonomy of SEZ, the foreign exchange regulations within GIFT City are eased. This ensures easier repatriation of profits and foreign currency convertibility.
Economic Zones and Business Opportunities in the GIFT City
Special Economic Zone (SEZ) Status
With Special Economic Zone (SEZ) status, GIFT City tend to attract Foreign Direct Investment to grow the economy of the region and the country by exporting goods and services and finding an international market.
These units provide well-developed areas for infrastructure with water supply, housing, power supply, transport services and more.
The Special Economic Zone Act 2005 made it clear that companies under this zone can avail of various benefits, including tax deductions, exemption of GST rates and other reductions or exemptions of other duties or taxes.
Free Zone Advantages
GIFT City is the only development area in India, that despite being a part of the SEZ unit, can offer individuals to set up residential spaces as well.
The free zone advantages within the GIFT City include foreign currency exchange as well as full repatriation of profits.
Entertainment and Residential Zones
GIFT City is primarily a business development area for global fintech companies, banks and intermediaries. However, on this 886 acres of land, entertainment and residential zones will also be created as proposed.
While 67% of the GIFT City-IFSC is dedicated to setting up commercial spaces, 22% of the land is approved for creating residential facilities, including residential buildings, villas, apartments and more.
The remaining 11% is reserved for creating recreational facilities, including a water park and GIFT Eye as inspired by London’s Eye, popularly known as the Ferris Wheel.
To elevate the social life of the people residing or working in the GIFT City, the development of multiplexes and cafes is also expected.
GIFT City vs. Competitors
GIFT City vs. BKC
While GIFT City has already established itself as the International Financial Services Centre (IFSC), Bandra Kurla Complex (BKC) seems to be one of its strong competitors.
Since it is a new project compared to BKC, it will take a few more years to be entirely functional with all the big players coming into force.
With the considerable ongoing development that GIFT City has been experiencing, it can be expected that, within a few years, GIFT City will become the development area that BKC is now today.
While you’re wondering about GIFT City vs. BKC, within GIFT City, big companies like Google and Oracle have already set up their establishments, making it a great space for job opportunities.
Benchmarking with Global Hubs
GIFT City offers operational and regulatory frameworks that align with global standards, thus providing both domestic and international organisations with a part of a financial ecosystem benchmarking with global hubs like Singapore, Hong Kong and Dubai.
Its positioning with the big players includes the facilitation of transactions in foreign exchange.
This offers the exchange of a wide range of financial products that were once inaccessible to Indians. As of January 2024, 10 foreign banks are present within GIFT City, despite being an ongoing project. However, given its time, Singapore has a more mature hub.
Bibliography
1. GIFT City – Gujarat International Finance Tec-City: https://www.giftcity.in/
2. GIFT City – Wikipedia: https://en.wikipedia.org/wiki/Gujarat_International_Finance_Tec-City
3. The Global Financial Centres Index 27 (GFCI 27) – Long Finance: https://www.longfinance.com/The-Global-Financial-Centres-Index-27-GFCI-27
