“I like not fair terms” is an adage that fits well on Nifty index traders on the Singapore Stock Exchange (SGX). Recently, the National Stock Exchange (NSE) and the SGX inked a deal to jointly start trading in Gujarat International Finance Tec-City. Although the details of the deal structure have not been divulged, the exchanges will set up a special purpose vehicle (SPV). This SPV will act as a conduit for trading on GIFT for funds based out of Singapore. But does this arrangement really fulfil the purpose of setting up GIFT?

Tax havens like Singapore and Dubai have cornered a pie of India’s financial markets. It is no secret that foreign money influences the Indian market from Singapore, and India has no jurisdiction over it. The Narendra Modi government had set up the GIFT City as an alternative to off-shore platforms. Today, GIFT enjoys a blanket 10-year tax holiday and a relaxed regulatory system.

The NSE and SGX have signed a deal called GIFT Connect. The details are kept under wraps, but it has come to the fore that Singapore fund managers will ‘not’ shift to GIFT or be governed by Indian laws. SGX will remain a front in GIFT and all trades will be done by a special vehicle for funds ensconced in Singapore. How does India benefit? Can it know the end-beneficiaries coming via SGX and subject them to domestic laws?

Dubious politicians, bureaucrats, and businessmen can keep playing from Mauritius and Cayman Island. SGX may say it allows funds to flow from destinations compliant with global money-laundering norms. Then, why do they need a front? Does SGX know the ultimate Nifty trader on its platform? The NSE should keep it simple. De-list Singapore Nifty and shun the middleman. Vested interests could say that such a move would hurt India. We should not fall for such narratives. Even a P-note ban did not hurt India.

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