The government of India is actively considering to set up a unified financial regulator for India's only international financial Services centre (IFSC) at Gift City(Gujarat International Finance Tec City (GIFT City).
“Yes, the government is looking at having a single regulator for all the entities belonging to banking, capital markets and insurance industry located in the IFSC at GIFT City. At present, they are being regulated by regulators like SEBI, RBI and IRDAI. We are awaiting a nod from the government after individual regulators indicated that they are okay with the idea, Gujarat International Finance Tec-City (GIFT) MD Ajay Pandey said in Mumbai..
The idea of a unified regulator was first mooted by RBI governor Patel in his speech at the Vibrant Gujarat Summit in January last year. This was taken as a suggestion by the government which had written to the regulators for feedback. Regulators have written back saying that they are okay with the idea, so now the government has to take the final decision, Pandey said. .
“We are providing a lot of incentives to foreign re/insurers for setting up their shops over here. For example, PF to their employees will be reimbursed by Gujarat government for five years. Also, we provide them facilities like rent subsidy and electricity duty exemption,’’ he said..
According to Pandey, though, no apple-to-apple comparison can be done between GIFT City with that of other IFSCs across the world, Indian IFSC is in demand in the country. Unlike Dubai IFSC, there are demands from the Indian companies to set up operations in the GIFT City.
A total of USD 23 bn transaction has already taken place so far at GIFT City.within a span of 1.5 years. It includes transaction of USD 8 bn in the banking sector alone in forms like external commercial banking (ECB), M&A funding and buyers’ credit.When it comes to capital market, it is happening at the rate of USD 250 million on an average on a daily basis.
The insurers and GIC Re, the sole reinsurer which is present in the GIFT City, have done a business with a total sum assured USD 5 bn.
A total of 7,500 people are working at te GIFT City .
GIFT IFSC already hosts three major insurance players, GIC Re, New India & ECGC, and five insurance broking entities-JB Boda, Risk Care, Xperitus, Pioneer and Trinity.However no foregnre/insurers have opened their offices in the IFSC as yet.
Recently International Financial Services Centre (IFSC) – Gujarat International Finance Tec City (GIFT IFSC) – gets a major boost with Insurance Regulatory Development Authority of India (IRDAI) issuing enabling regulations for undertaking offshore insurance business from IFSC.
Under the regulations, with a a minimum capital of Rs 10 crore,.foreign insurers are permitted to open IFSC Insurance Office (IIO) at GIFT IFSC. As GIFT IFSC has been notified as foreign territory by Govt. of India the foreign direct insurers (Life, Non-Life & General) & foreign re-insurers are permitted to open office to undertake dollar denominated business.
The Indian government 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.