By Rajiv Shah
This blog continues my story, “A revdi-funded dream? Tax breaks, hype, unease: PwC reveals GIFT City’s fragile foundations.”
Ironic though it may seem, what PriceWaterhouseCoopers (PwC) recently observed about the lack of a talent pool in Prime Minister Narendra Modi’s dream project, the Gujarat International Finance Tec-City (GIFT City), had already been predicted by another global consultant — McKinsey & Company — not days or months ago, but more than two decades earlier in what was then described as a feasibility study.
I was working with The Times of India and was about to retire as the paper’s political editor. The year was 2012. I had come to know that McKinsey had carried out a feasibility study for the GIFT project, and I wanted the document badly enough to do a story based on its findings.
I tried obtaining it from several sources, including bureaucrats in the state urban development department, which was responsible for the project. Many promised to share a copy and even directed those handling the special purpose vehicle, GIFT Company Ltd, to “do the needful.” I received polite phone calls from GIFT Company Ltd executives assuring me they would “look into the matter,” but nothing came of it.
One day, a senior bureaucrat I knew — one of the most insightful among Gujarat’s 250-odd IAS officers — called me to his office. Like me, he too was on the verge of retirement. Handing me a printout that looked like a detailed presentation of the McKinsey study, he said it was a feasibility document outlining what GIFT should look like and what the authorities must do to make it competitive. It was, he warned, a “rare document, not meant for circulation,” and asked me to return it after going through it.
The study, he explained, had been prepared in 2007, when GIFT was first conceptualized. As I went through it, I understood why there was so much reluctance among officials to part with it. Instead of writing a news story, I decided to turn it into a blog in my True Lies column on the Times of India website — my blogs, I had noticed, were drawing more attention than print stories. The piece, titled "Raw GIFT, handle with care", was published on October 26, 2012.
By then, GIFT — situated along the Sabarmati River, about ten kilometres from Ahmedabad — was being developed in partnership with Infrastructure Leasing & Financial Services (IL&FS). Two GIFT towers were nearing completion, and an exhibition complex was being built by the India International Textile Machinery Exhibition Society, a body that had little to do with finance. The Gujarat Electricity Regulatory Commission (GERC) had already booked office space there, and, interestingly, superstar Amitabh Bachchan had bought land nearby amid his “Kucch din to guzariye Gujarat mein” tourism campaign. There were even rumours that some senior bureaucrats had followed suit. After all, GIFT was fast turning into a real estate hotspot between Gandhinagar and Ahmedabad.
Marked “confidential” for reasons best known to the state bureaucracy, the tone of the McKinsey report was not very different from the high-flying phrases seen in the latest PwC study. Much like PwC, McKinsey had declared in 2007 that India’s financial services were “poised for dramatic growth over the next decade, creating close to 15 million jobs by 2020.” With “the right building blocks in place,” it said, GIFT — with its promise of world-class infrastructure at unmatched price points — could evolve into a major financial hub.
The report outlined a lavish wishlist for the government: roll out a “comprehensive infrastructure plan,” offer investors competitive prices for 80 million square feet of office space, institute “enabling tax policies and regulations to attract key clients,” and create a “single-window clearance system” to facilitate approvals.
But like PwC nearly two decades later, McKinsey had also flagged a looming problem — the human resource gap. Quoting directly from the report: “Based on expected local talent supply projections, GIFT is likely to face a severe talent gap in the medium to long term.” It noted that “Gujarat faces a severe shortage of talent, with a shortfall in higher educational institutions, low enrolment rates in English-medium schools, and a perceived reluctance on the part of senior management to relocate to Gujarat.” Sound familiar? It could have been written in 2025.
McKinsey backed its warning with data, showing that top-tier institutes were scarce in Gujarat. It benchmarked Ahmedabad poorly against other Indian cities. Referring to a Government of India study by Percy Mistry on making Mumbai an international financial centre, McKinsey showed Ahmedabad lagging far behind. On a scale of 10 for “attracting a sustainable local economy,” Ahmedabad scored a dismal 0.6, compared to Mumbai’s 4.7, Delhi’s 2.8, Chennai’s 1.0, Kolkata’s 1.6, Bangalore’s 0.9, and Hyderabad’s 0.9. Pune barely tied with Ahmedabad.
For “highly developed infrastructure,” Ahmedabad’s score was 2.7, below Mumbai’s 4.7, Delhi’s 3.7, Chennai’s 3.8, Kolkata’s 3.2, Bangalore’s 3.2, Hyderabad’s 3.1, and Pune’s 3.3. Only in “quality of life” did it somewhat hold ground with 2.7, close to Mumbai and Bangalore (2.9 each), and Delhi (2.6), though it still lagged behind Chennai (3.8), Kolkata (3.8), and Hyderabad (3.0). In overall terms, Ahmedabad’s ranking of 1.8 placed it last among major Indian cities.
McKinsey’s findings aligned closely with Percy Mistry’s. In a “conducive business environment,” Delhi led with 9.7, followed by Mumbai (7.2), Bangalore (5.3), Pune (4.0), Hyderabad (3.6), and Chennai (3.2). Ahmedabad scored a mere 1.8. In gross city domestic product, it ranked 2.4 — far behind Mumbai’s 10, Delhi’s 8.2, and Kolkata’s 6.9.
The city fared poorly across most metrics — availability of graduates, telecom bandwidth, power, roads, and banking activity — except for “cost of living” and “office space rental,” where it ranked best with 10. Yet McKinsey did not analyze these results, merely concluding that “no Indian city compares strongly with existing and emerging international financial centres.” It optimistically claimed that GIFT was still “well-positioned to capture a significant portion of this opportunity.”
The report also warned of “key threats” — Singapore’s thriving capital market and Dubai’s proactive regulatory system. “Given its proximity to Mumbai and the presence of a large Indian-origin population,” it cautioned, “Dubai represents a major threat to GIFT.”
This echoed what a retired professor from the Indian Institute of Management, Ahmedabad, had told me in 2007. When I asked for his views on GIFT, he replied, “What gift?” Thinking he had misheard, I clarified, “The finance city the state government has proposed between Gandhinagar and Ahmedabad.” He repeated, “That’s what I’m asking — what GIFT? If you think it can overtake Mumbai, let alone Dubai or Singapore, it’s not going to happen.” He explained that nowhere in the world had a financial capital successfully been shifted from one city to another. “This has been tried with little or no success,” he said. “In the age of ICT, office space is shrinking. You don’t need 500 hectares for a financial centre when it can be done in 15.” He added that GIFT had never been discussed with him or any financial expert he knew.
In an earlier Times of India blog, published on May 17, 2012, I had pointed to the hype being built around GIFT even then. Quoting a high-level presentation, I noted its bizarre claim that “85 per cent of Gujarat’s residents want to relocate to GIFT.” The presentation, however, was silent on who these “residents” were or where the survey was conducted. It also claimed that while only 24 per cent of non-residents were willing to move to Gujarat, 45 per cent were ready to move to GIFT — again, without citing any source.
That same presentation suggested that GIFT would outshine every existing or upcoming international financial district — from Dubai’s DIFC to Songdo in South Korea, New York’s World Trade Center, London’s Canary Wharf, Shanghai’s Pudong, Paris’s La Défense, and Singapore’s and Tokyo’s stock exchanges. It rated GIFT as “Excellent” in every category — “Overtaking Place,” “Smart Buildings,” “Competitive Service Provision,” and “Trading Platform,” among others — citing British Telecom as the source. Other cities, it showed, were riddled with “Poor” or “Reasonable” marks. Only in “Sub-Sea Connectivity” was GIFT rated half “Excellent” and half “Reasonable.”
I was reminded then of what Sam Pitroda, the father of India’s telecom revolution, had said at the Vibrant Gujarat business summit in January 2011. As things stood, he warned, GIFT was more likely to become a real estate enclave for the wealthy than the international financial hub it was touted to be.
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