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GIFT chief's take on why Gujarat would be centre of world finances: "Cheap" real estate prices

By Our Representative
Even before it has developed into a normal finance city, Gujarat International Finance Tec-city (GIFT) chief Ramakant Jha has already turned into an international finance city. In an interview with a United Arab Emirates news site, The Nation, Jha -- who considers himself as the brain behind the Navi Mumbai real estate project -- has there is legal sanction for GIFT for being an "international finance city", which isn't available to any other place, including Mumbai.
Giving his "legal" explanation, Jha says, "under the special economic zone (SEZ) Act, they have approved GIFT" as the "only notified international financial services centre in India." He adds, "This means that we can actually allow a lot of offshore activities – offshore banking, offshore insurance, offshore asset management."
Jha doesn't stop here. He believes there are other "advantages" of GIFT over Mumbai. "There is no international financial services centre in India", and even Mumbai is "only doing domestic operations", while international operations are "not happening from Mumbai or India at all".
Further, as compared to Mumbai, the real estate prices in GIFT are far cheaper, he insists. This is what he says: "For a new business coming to Mumbai it has become very, very expensive. It is easier and more cost-effective to operate from London today. In just a 40-minute flight from Mumbai you can be in Gujarat. Instead of 300 rupees a square foot rent in Mumbai, GIFT is 50 rupees a sq ft a month."
Then there is the reason that "financial services" are a strength of Gujaratis. And for this he gives the "unique" example of this. "if you go to the Dubai International Financial Centre and you meet the head of business strategy, Chirag Shah, he’s Gujarati. The Gujaratis are all over the world with their business acumen and their financial background", he underlines.
Interestingly, Jha does not recall that in Mumbai, too, Gujaratis are perhaps the most important financial operators.
Of course, there are constraints, Jha thinks, though the new Modi regime is trying to remove them. "Foreign banks require clear rules and regulations, which are now coming out", he says, adding, "We see challenges in terms of the regulations. The regulations which come out should be business-friendly."
He underlines, "If I am a global institution and if I can easily set up in Singapore or in Malaysia and if regulations in India are not conducive or as business-friendly as they are in Singapore, why should I come to GIFT?"
Less than a year ago, the New York Times quoted Jha, who heads GIFT since 2010, that the project needed to be "radically scaled down, and reduced the first phase of construction to two 29-story office buildings, the tallest structures in Gujarat.”
Pointing towards the plight of GIFT as of today, NYT had said, “So far, there are only four tenants, including the state electricity commission (Gujarat Electricity Regulatory Commission or GERC) and the development company behind the project (Infrastructure Leasing & Financial Services or IL&FS).”
Experts have long questioned GIFT's viability, saying it can at best turn into a real estate hub. "It may be too premature to start visualising a financial centre outside Mumbai", said Prof Sebestian Morris in 2012.
“If you take the case of London or New York, a financial city project was planned in an area of about half a square mile. These places were already established business hubs before the finance centres shaped up,” he said, adding, “Achieving a similar feat is difficult for a country like India where land availability is a problem.... If a finance centre has to be set up in India at all, it should be in Mumbai, and not Ahmedabad."
Jha's fresh "view" to the UAE site comes amid frantic efforts by the Modi government to scale up GIFT in every possible way. Finance minister Arun Jaitley raised the pitch for GIFT in his budget speech on February 28, saying, "GIFT in Gujarat was envisaged as an International Finance Centre that would actually become a good an international finance centre as Singapore or Dubai."
Earlier, a memorandum was signed by the Bombay Stock Exchange and the National Stock Exchange with the Gujarat government to "set up shop" in GIFT. Others who have so far shown interest in setting up "shop" in GIFT are mainly nationalised banks. However, admit Gujarat government sources, no international bankers have shown interest in GIFT.

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