Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-24 on July 22. Following the presentation, Chief Economic Adviser Dr. V. Anantha Nageswaran held a press conference to address media queries regarding the survey.
In the Economic Survey report, it was stated that the GIFT IFSC is emerging as a gateway for global capital inflows into India. IFSC in GIFT City, Gujarat, is envisaged to be a unique international financial jurisdiction located inside onshore India, set up with a dual objective of onshoring Indiacentric international financial services business as well as serving as a preferred gateway for channelising global capital flows into and out of the country.
The Survey reveals that over the last few years, GIFT IFSC has made great strides in achieving both of these objectives. The initiative is a shining example of India’s firm commitment to undertake deep, bold and ambitious financial sector reforms to attract the global financial services business and gradually become a global leader in international finance.
The report acknowledges that the uniqueness of the IFSC as a distinct financial jurisdiction emanates from three fundamental factors. The IFSC has been designated as a non-resident zone under the Foreign Exchange Management Act, which means that entities set up in the IFSC are outside the capital control restrictions and, therefore, can conduct business in any of the eleven notified foreign currencies.
The IFSC has been brought under the regulatory purview of a dedicated and unified financial regulator, i.e. IFSCA (International Financial Services Centres Authority), which has been set up under an Act of Parliament. And finally, through successive Union Budgets, the Government has provided a separate tax regime for the IFSC, which is at par with what is available in other leading global financial centres. The competitive tax regime has ensured that financial services institutions operating from IFSC are not at a disadvantage.
The contribution of GIFT IFSC in transforming the country’s financial industry landscape can be better appreciated by some key business activities in GIFT IFSC, like banking sector, Fund management.
The Banking ecosystem in GIFT IFSC is rapidly evolving with a healthy mix of foreign and domestic banks, primarily catering to the foreign currency borrowing requirements of Indian corporates and public sector enterprises through external commercial borrowing, trade finance, etc.
As Per the Report In the last three years, there has been rapid growth in Fund Management Entities (FMEs) and AIFs registered with IFSCA. As of March 2024, the cumulative FMEs and funds registered rose from 39 and 33 as of September 2022 to 114 and 120, respectively, as of March 2024.
The survey also studied the aviation industry, as per the study, the aviation industry in India is on the cusp of unprecedented growth, with a strong order book of more than 1500 + aircrafts placed by Indian airlines and a projected demand for over 2,200 aircrafts by 2042. Currently, most aircraft operated by Indian airlines are leased from offshore lessors that have access to competitive capital costs.
It was stated that in three years, green shoots have been visible in IFSC, with more than 28 aircraft lessors already registered, which have leased more than 120 + aviation assets, including commercial aircraft, helicopters, aircraft engines and ground support equipment. Interestingly, Air India has also commenced leasing its wide-bodies aircraft from the IFSC Zone.
The IFSC uniquely positioned to become an ‘international higher education hub’ by attracting topquality global universities keenly exploring India due to its talent and demographic profile.
The survey shows that the entry of two university such as the University of Wollongong from Australia has paved the way for other globally reputed universities to look at this opportunity and contribute to the rise of an educated and skilled India. The Survey expected IFSC to emerge as a preferred gateway for global capital flows into and out of the country.
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