Tall towers loom in the distance as you head out of Ahmedabad on National Highway 48 towards Gandhinagar. The steel-and-glass structures of different shapes and sizes come into full view along the highway as you cross the security check-point of Gujarat International Finance Tec-City, or GIFT City in short, and drive into its sprawling premises.

And, it’s vastly different from the city you’ve just left behind. Neatly organised with tall buildings spaced out from each other, the lay-out of GIFT city appears well-planned with broad roads and landscaped shoulders. The buildings house heavyweights such as SBI, Citibank, LIC, BSE, Google and several banks, domestic and foreign. Besides, there are separate towers for the International Financial Services Centre Authority (IFSCA), the International Bullion Exchange and the units of BSE and NSE. That you’ve entered an international financial and business district is clear.

It’s been some time in coming, but in the past ten years GIFT City has grown rapidly, attracting over 660 firms, all housed in those 19 tall, gleaming edifices one can see. The campus is sprawled across a 1,000 acres on the banks of the Sabarmati river. Though still in a nascent stage, these firms are part of a financial ecosystem that could compete with thriving international financial zones. “In the last four years, about 28 regulations and 14 frameworks have been put in place and the outcome has been phenomenal. These regulations are receiving a lot of traction among investors both in India and abroad,” K Rajaraman, chairman of the International Financial Services Centres Authority (IFSCA) told businessline.

“We want to do things which complement what is done in India. IFSC is not meant to be an arbitrage market. We are here to aid, assist, facilitate, grow and support the Indian growth agenda,” Rajaraman says, adding that GIFT City is also being developed into a climate and sustainable finance hub.

Gujarat government officials point out that GIFT City not only features among the 100-odd financial centres that feature on the Global Financial Centres Index, but has overtaken Mumbai. In September 2023, GIFT City stood at 62nd position, while Mumbai fell to 66th position. As per the latest standing in March 2024, GIFT City has improved its position to 57th on the list, while Mumbai stood at 58th position.

Expanding ecosystem

The figures are mind-boggling. This expanding ecosystem currently boasts of 25-odd aircraft leasing and financing firms that have leased out 150 aviation assets; India’s first International Bullion Exchange (IIBX), which has traded eight tonnes of gold and 900 tonnes of silver till March 2024; 28 IFSC banking units have cumulative banking transactions of $755 billion and banking assets of $56 billion (till February 2024); 33 insurance and intermediary firms that have booked a gross premium of $319 million (till December 2023), 100-plus Alternate Investment Funds that have committed an amount of $32.65 billion (till February 2024); 94 fund management entities, two international stock exchanges, 64 ancillary service firms and more than 45 fintech firms.

Shunned by regulators, banks and politicians in the past, GIFT City — conceptualised in 2007 — took off only after Narendra Modi became the Prime Minister in 2014. While presenting the Union budget in February 2015, the then Union finance minister Arun Jaitley announced that the government would issue regulations for the project that had “languished”. Almost all Union budgets thereafter, contained some support — financial or otherwise — for this project in Gujarat.

Now that it’s up and running, work is on at a feverish pace. Over 25 tower cranes — armed with long booms and rising hundreds of feet in the air — are hard at work to build 34 more high-rise structures. “What one sees in GIFT City today is a result of the reforms carried out in the last 10 years. By offering a business and regulatory environment that is comparable with other global financial centres, IFSC at GIFT City provides a platform for both Indian and international corporates to deal efficiently in services, not only for India, but for third countries as well,” Tapan Ray, Group CEO and MD of GIFT City told businessline.

Between 2010-14, GIFT City went through a period when there was almost zero interest in the project. Recently, when a tender to build a new 200-room 5-star hotel was floated, the project received 11 bids. “The Government is looking at an enclave that could reform faster than India. The focus of IFSC in Gujarat is on bringing world class financial services to India with light-touch regulations. The idea is to provide regulations that provide comfort to global investors in line with Singapore, Dubai and other places,” Rajaraman said during a recent interaction with ship leasing firms in Mumbai.

The idea behind GIFT City is to bring back the companies that left Indian shores for various reasons including higher taxes, complicated procedures, policies and lack of finance. “So our tag line is onshoring what is offshore,” adds Rajaraman who functions as a unified regulator handling the functions of RBI, SEBI, IRDA and others at GIFT City.

Prohibition laws, which were considered a “holy cow” in Gujarat, have also been relaxed, enabling those who may not have come to a ‘dry’ State otherwise.

The 10-year tax holiday where exemptions are given with regard to capital gains tax, GST, stamp duty have all helped attract new participants to this financial enclosure. “The Governments — both in the State and at the Centre — have been standing steadfast behind the project,” officials say.

How GIFT city stacks up
How GIFT city stacks up
IFSC Banking Units (IBUs): 28
Cumulative banking transaction: $755 billion (as on Feb 2024)
Size of banking assets : $56 billion (as on Feb 2024)
Insurance, Intermediaries: 33
Gross premium Booked by GIFT City IFSC Insurance office: $319 million (till December 2023)
Aircraft leasing, financing firms: 35
Aviation assets leased: 150
Ship leasing: 10 units
Bullion Exchange: 100-plus qualified jewellers on boarded, 900 tonnes of silver and 8 tonnes of gold traded till March 2024
Fintech firms: 45
Alternative Investment Funds: 100
Foreign Universities - 2
Fund Management: 94 firms
International Stock Exchanges: 2
Enabling start-ups

Apart from IIBX, which has three vaults to store over 700 tonnes of gold in GIFT City, the two exchanges — India International Exchange and NSE International Exchange — have an average daily trading volume of $2-3 billion.

Earlier this year, the Union Finance Ministry had notified direct listing of Indian companies on the stock exchanges of GIFT City, which was seen as a move that will enable start-ups and unlisted companies access global capital. Now, efforts are underway to merge both the exchanges into a single entity.

Nand Gopal Anand, Partner of Gurgaon-based JSA Advocates and Solicitors says that GIFT City will transform the international business landscape in India in next five years. “The journey of this cty was not flawless. There were various practical issues initially when it was set up, such as lack of dispute mechanism resolution, residential facilities for expats and employees, applicability of multiple regulations, and so on. However, the Government took timely feedback from stakeholders and took steps in the right direction (such as setting up of the IFSA, opening of the Gujarat international maritime arbitration centre, development of residential areas, construction of hotels), which has helped in catalysing the city.

“We would have never thought that ship lessors would undertake a ship leasing transaction from India. However, GIFT City has made all this possible for India. Over the next 5 to 6 years, we can expect the city to further transform the international business landscape in India and become a top global financial hub,” explains Anand.

More is being planned. Hotels, clubs, gardens, entertainment zones, river front, metro stations, pod taxis are among the infrastructure projects taking shape as the city prepares to kick-in social life by inaugurating the first set of high-rise residential structures during June 2024.

Now the government is in the process of increasing the size of GIFT City to 3,430 acres, from 1,000 now, which will house a population of one million. The foreign universities, Deakin University and University of Wollongong,  setting up campuses in GIFT City are being seen as human resource multipliers. These universities are expected to offer advanced courses of cyber security, financial management, technology and others, thus fulfilling the skills needed for an under construction greenfield city. “It is still a work in progress. We are prepared for the long haul,” says Ray. Well, as the saying goes, Rome was not built in a day.