The Union Budget has proposed several measures to enhance business activities at Gujarat International Finance Tec-City – International Financial Services Centre (GIFT IFSC).
These include delegating powers under the SEZ Act to the International Financial Services Centre Authority (IFSCA) to avoid dual regulation, setting up a single-window IT system for registration and approval from IFSCA, SEZ authorities, Goods & Services Tax Network (GSTN), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority of India (IRDAI), as well as permitting acquisition financing by IFSC banking units of foreign banks.
As per the Budget proposal, a subsidiary of EXIM Bank for trade re-financing would be established at GIFT IFSC and IFSCA Act would be amended for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act.
The measure also includes recognising offshore derivative instruments as valid contracts, Finance Minister Nirmala Sitharaman told the Parliament. “For countries looking for digital continuity solutions, we will facilitate setting up of their Data Embassies in GIFT IFSC,” she said.
In a note on the Budget, Law firm Cyril Amarchand Mangaldas said as far as GIFT IFSC is concerned, income distributed by the IFSC banking units to non-resident Offshore Derivative Instruments (ODI) holders are proposed to be exempt in the hands of ODI holders.
“Transfer of ODIs is already exempt in the hands of non-residents,” the firm said.
Ketaki Mehta, partner-GIFT City, Cyril Amarchand Mangaldas said, “In relation to GIFT IFSC, Budget 2023 greatly emphasised on ease of doing business by streamlining the procedure through establishment of a single-window clearance system for various inter-regulatory approvals and processes and providing a solution to dual legislation.”
“This will greatly encourage many private entities to consider GIFT IFSC with renewed enthusiasm,” he added.
