Finance panel urges Centre to create region-specific IFSC models beyond GIFT City.
GIFT-IFSC only Indian centre; China has nearly 10 such financial hubs.
Finance Ministry cites efficiency, regulation as reasons for single-centre approach.
Panel suggests reforms to boost GIFT-IFSC’s global ranking and competitiveness.
Parl’s Finance Committee Suggests Setting Up Region-specific IFSCs Similar to GIFT City
The GIFT-IFSC in Gujarat’s Gandhinagar was the country’s only IFSC unlike other major economies, including some BRICS nations like China which has about 10 Centres.
Parliament Panel's Finance Committee Wikipedia
Summary
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The Standing Committee on Finance has asked the Centre to identify region-specific models for new International Financial Services Centres (IFSCs) and hence develop similar models in other major metro cities in order to integrate India into the global financial services landscape.
Chaired by Bhartruhari Mahtab, the Standing Committee recommended, “While maintaining focus on GIFT City as the core hub, the government may consider establishing satellite financial innovation zones or fintech clusters in other major cities to foster inclusive growth, create talent pools and attract diverse investors all contributing to the goals of Viksit Bharat.”
According to the report that was tabled in the Lok Sabha on Monday, the GIFT-IFSC in Gujarat’s Gandhinagar was the country’s only IFSC unlike other major economies, including some BRICS nations like China which has about 10 Centres.
Established in April 2020, the International Financial Services Centres Authority (IFSCA) is a unified regulator to promote ease of doing business in IFSC and provide a world class regulatory environment.
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Why Did Finance Committee Suggest this?
In a reply to the standing committee, the Finance ministry said that globally one can find only one international financial centre in a country and that this was done for optimum utilisation of resources. As per a Business Standard report, the ministry further noted that the reason for this strategy is that the mainland activities are not affected by the offshore activities.
“This provides an easy mechanism for the regulator to monitor one location and keep upgrading regulatory infrastructure at the said location,” the finance ministry said.
Additionally, the parliamentary panel stated that the GIFT-IFSC has improved its ranking on the Global Financial Centres Index [GFCI 37] to 46th place out of 119 financial centres evaluated from the previous 52nd rank.
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The panel has also suggested that in the upcoming years, measures like further streamlining of policies, improving transparency, fostering financial education, enhancing digital infrastructure, regulatory sandboxes, simplifying taxation regimes, reducing compliance burden can help GIFT-IFSC position itself as a premier global financial hub.
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