Explained: How Modi government through Budget 2022 gave yet another boost to GIFT City

In the Union Budget 2022-23, the Modi government has confirmed that it will allow the setting up of world-class foreign universities in Gandhinagar's GIFT City, free from domestic regulations, to facilitate the availability of skilled manpower in the financial services space.

GIFT CITY: International Arbitration Centre

- In addition, an international arbitration centre will be set up in the GIFT City for timely settlement of disputes under international jurisprudence, Finance Minister Nirmala Sitharaman said while presenting Union Budget for 2022-23.

- The centre could be on the lines of the Singapore International Arbitration Centre, or the London Commercial Arbitration Centre.

GIFT-IFSC 

Currently, GIFT-IFSC is the maiden international financial services centre in India.

Budget 2022: Big boost to GIFT City - What FM Sitharaman confirmed and what experts say

- World-class foreign universities and institutions will be allowed in the GIFT City to offer courses in Financial Management, FinTech, Science, Technology, Engineering and Mathematics free from domestic regulations, except those by IFSCA to facilitate availability of high-end human resources for financial services and technology, as per FM's speech during Budget 2022 presentation.

- An International Arbitration Centre will be set up in the GIFT City for timely settlement of disputes under international jurisprudence.

- Services for global capital for sustainable & climate finance in the country will be facilitated in the GIFT City.

- The new measures will further instill confidence among foreign investors and business houses in the financial services space looking to shift their base to the IFSC, V Balasubramaniam, MD and CEO India INX, said.

-The finance minister said "world-class foreign universities and institutions will be allowed in the GIFT City to offer courses in financial management, fintech, science, technology, engineering and mathematics free from domestic regulations, except those by IFSCA".

-The move will facilitate the availability of high-end human resources for financial services and technology, she added.

-According to her, services for global capital for sustainable and climate finance in the country will be facilitated in the GIFT City (Gujarat International Finance Tec-city (GIFT City).

-This is going to provide further thrust for 'Green Finance' at the IFSC.

- To further promote the IFSC, the finance minister has proposed tax exemptions for income of non-resident from offshore derivative instruments and income received from portfolio management services in IFSC.

- Other tax exemptions include over the counter (OTC) derivatives issued by an offshore banking unit and income from royalty and interest on account of lease of ship. These exemptions are subject to "specified conditions".

 - This will not only boost the trading but also liquidity on the recognised stock exchanges in IFSC.

 -"The exemption of income tax would promote various business activities such as ship leasing and financing, offshore fund management and offshore banking activities in GIFT IFSC," Tapan Ray, MD and Group CEO, GIFT City said.

- He, further, said that Union Budget announcements reiterate the commitment of Ministry of Finance towards energising the regulatory ecosystem at GIFT-IFSC, which will have a huge multiplier effect for the country's economic growth.

- "The setting up of world-class universities without any domestic regulation will facilitate skilled manpower in the financial services space. International arbitration centre will strengthen the dispute resolution mechanism at GIFT IFSC and enhance ease of doing business at GIFT," he added.

- Manoj Purohit, Partner & Leader Financial Services Tax, BDO India, said that proposal to allow setting up of world-class financial institutions and universities free from domestic regulations under IFSCA will give boost to human resources development and expansion in GIFT IFSC.

- The International Financial Services Centres Authority (IFSCA) is a unified authority for the development and regulation of financial products, financial services and financial institutions in the IFSC in India. 

(With PTI inputs)