GIFT City Gujarat and its impact on the Indian Economy

Gift-City-Gujarat

Is GIFT City Gujarat the next financial hub of India?

While we are all still obsessing over smartphones and smartwatches, the Gujarat government has gone ahead to create an entire smart city.

The GIFT city Gujarat International Finance-Tech City, is India’s smart city located in Gandhinagar, Gujarat.

Is GIFT City Gujarat really a gift to the Indian economy? Let’s explore.

The birth and growth of GIFT City Gujarat

A greenfield project conceptualised by the Gujarat government in 2007, the objective is to create a top-notch financial hub that caters to domestic and international needs. With advanced technology and infrastructure, GIFT City Gujarat aims to provide a business environment free of obstacles. 

GIFT City Gujarat is a planned business district that will act as India’s tool to integrate with the global market. Eventually, the focus is to help India achieve self-reliance and global dominance in the financial sector.

Bank of Baroda was the first entity to start its operations in 2012. As of July 2023, it is home to more than 545 entities and the total banking transactions of its financial institutions stand at $508 billion.

The GIFT Infrastructure

Located at a short distance of 12 km from Sardar Vallabhbhai Patel International Airport, the city is constructed on the river bank of Sabarmati. 

The total area is about 886 acres of land, with 261 acres reserved for SEZ (Special Economic Zone).

The government planned the construction in four phases, of which three are completed as of 2023.

Gujarat GIFT City’s influence on the economy

In the words of the Prime Minister of India, Shri Narendra Modi:  “The vision is to create a world-class finance and IT zone for India to provide services not only to India but to the entire world”.

True to its vision, this city is influential in various sectors of the economy. With an annual GDP growth rate of 5.9%, the Indian economy is currently ranked fifth in the world. By 2027, India is expected to be in the third position if it grows at a similar rate. The Gift City Gujarat and its anticipated supremacy in the financial and technology sectors will play a crucial role in India achieving this rank

International Financial Services Centre (IFSC)

One of the main ideas of the GIFT City Gujarat is the IFSC.

The purpose of IFSC is to provide various financial services under one roof. It hosts activities related to stock exchanges, banking, insurance and many more.

The IFSC has two international stock exchanges – India International Exchange (Subsidiary of the Bombay Stock Exchange) and NSE IFSC (Subsidiary of the National Stock Exchange).

With an average daily turnover of $ 20 billion, these exchanges have made it convenient for Indian investors to diversify their portfolios by investing in foreign stocks.

India International Bullion Exchange (IIBX) is another feather on the cap of the city. IIBX is the first bullion exchange in India and the third of its kind across the globe. 

It is expected to increase market efficiency and transparency in gold trading. In spite of being the second largest gold consumer, India has not been able to influence global prices. With IIBX, traders can buy gold directly from international sellers without intermediaries and ship it to any part of India. The government believes that this step will help in achieving the objective of “One nation, one gold rate” and take India one step closer to being the price maker in this category.

Foreign Direct Investments (FDI)

Special Economic Zones (SEZ), as we all know, have rules and laws that are liberal compared to the rest of the country. 

Close to 30% of the GIFT City Gujarat is classified as SEZ to promote the economic growth of the country.

One of the vital benefits of SEZs is their potential to draw the interest of Foreign Direct Investments. With tax benefits and other financial incentives, GIFT City Gujarat has attracted several multinational financial organisations like JP Morgan, Bank of America, Deutsche Bank, etc., along with IT giants like Oracle. The SEZ has been successful in increasing employment opportunities in the country and has over 16,000 employees working.

Rise in real estate prices 

The GIFT City is built between the political capital of Gandhinagar and the business capital of Ahmedabad. With proximity to the cities, highways and the airport, this location has been attracting the interest of real estate investors. Since the start of GIFT City, the real estate sector in Gujarat is witnessing fast growth.

Cutting edge technology

Apart from achieving financial excellence, GIFT City Gujarat aims to become a technology hub as well. With research and incubation centres, the GIFT City is attractive not only for IT giants but also for start-ups. 

Start-ups are crucial for the economic growth of the country as they provide multiple employment opportunities in urban and rural areas.

Gujarat International Maritime Arbitration Centre (GIMAC)

Apart from its activities in the financial and technical sectors, Gift city Gujarat is expanding to the marine and shipping industry with GIMAC.

A first-of-its-kind arbitration centre in India, GIMAC is set up to bring in standardisation and resolve disputes in the maritime industry. The GIMAC is expected to bring a fair mechanism for resolving disputes locally and globally.

Conclusion

The GIFT City Gujarat offers an unparalleled environment for significant economic activities in the country. With quality infrastructure and technology, City has not only attracted organisations from the corporate sector but is successful in captivating the interest of foreign universities to start their branches in India. 

The government of India and Gujarat believe this to be one of the notable contributors to improving India’s position globally.

For more insights on obtaining the best financial content to make informed investment decisions, be sure to check out our blog post on the Most Effective Ways to Get the Best Financial Content.

DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.

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