GIFT City is a dream project of our Honourable Prime Minister, Mr. Narendra Modi. The International Financial Services Centre is the vision of the Indian government to make it a global hub for financial services transactions. This would translate into an increased flow of Foreign Direct Investments in India.
Several announcements made in the budget serve as an attraction for the foreign investors. Tax holidays have been announced for the offshore funds to redomicile into India, giving them the same tax benefits that they are enjoying in other places. SEBI has issued operational guidelines providing that registered foreign portfolio investors (FPIs) would be permitted to operate in IFSCs without undergoing any incremental approval process. To compete with other global financial hubs, several tax incentives have been offered to IFSC participants, as well as to nonresident investors and business partners. Minimum alternative tax is payable at a reduced rate of 9%. To promote the relocation of foreign funds to IFSCs, the Indian Finance Act, 2021 introduced a scheme, with effect from April 1, 2022, for the relocation of Alternative Investment Funds in India. A large amount of these AIFs lie outside India and the objective is to get the India centric Alternative Investment Funds to IFSC.
Another area of good business development which can infuse global trade and financing is the aircraft leasing and financing at IFSC. This business can also translate into billions of dollars of business. IFSCA has managed to attract various foreign banks in different versions. The budget has approved of giving tax advantages to the investment division of these foreign banks. GIFT IFSC can also become a preferred listing destination.
These are some of the areas that IFSC is planning to capitalise on in order to make India a global hub for financial services transactions.