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Insurance operations at India’s only operational International Financial Services Centre (IFSC), at Gujarat International Finance Tec City (GIFT), will get a major boost with the Insurance Regulatory Development Authority of India (IRDAI) issuing enabling regulations for undertaking offshore insurance business from this IFSC.
Under the regulations, for the first time in India, foreign insurers have been permitted to open IFSC Insurance Offices (IIO) at GIFT IFSC, which has been notified as foreign territory by the Government of India.
Foreign direct insurers (life, non-life and general) and foreign re-insurers are permitted to open office to undertake dollar-denominated business from within the IFSC in GIFT SEZ, all other Special Economic Zones in India, and foreign countries (including foreign to foreign, India to foreign and foreign to India). It would also be allowed to undertake domestic insurance and reinsurance business in line with the provisions of IRDA regulations, said Ajay Pandey, MD & Group CEO, GIFT City, here on Wednesday.
The Government of India has provided competitive tax regime for the IFSC units and thereby units are provided 10 year tax holiday (of which the first 5 years is a complete tax holiday and for next 5 years there’s a tax reduction of 50%),which is applicable for all insurers operating within GIFT IFSC. For export of services, insurance companies operating from IFSC are exempted from GST.
GIFT IFSC, being a foreign territory, mainly conducts offshore business. Thus, the restriction on shareholding does not apply in IFSC and thereby a foreign direct insurer has option to set up operations directly without any local partner.
The move would also help Indian insurers to set up their offshore office in GIFT SEZ IFSC to undertake dollar business which otherwise was restricted in India. This would become a big enabler for Indian direct and re-insurance players as it provides them a foreign branch in close proximity which would be operationally cost effective.
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