Bloomberg hosted Injeti Srinivas, Chairman of the International Financial Services Centre Authority (IFSCA) for an exclusive discussion on the opportunities and challenges ahead as India prepares to set up its first globally competitive IFSC.
Mr. Srinivas took over as the Chairman of the newly-formed IFSCA in July 2020, after the Indian Government set up the body as a unified regulatory authority for all the IFSCs in the country. The much awaited move now streamlines regulation of all financial services entities in the IFSC. His first task at hand is to help catalyse the development of the IFSC at Gandhinagar-based financial special economic zone or Gujarat International Finance Tech (GIFT) City.
Speaking about his vision for the IFSCA, Mr. Srinivas said, “Our mandate is not only to ‘regulate’ the financial services business in IFSC but also to ‘develop’. Our focus is to provide market friendly regulations, comparable with the best jurisdictions globally and create an attractive location for international financial services. Our vision is to establish GIFT IFSC as a Dominant Gateway for global financial flows into and out of India, and simultaneously emerge as a major global financial hub.”
Representation of Modern India
Mr. Srinivas believes that GIFT IFSC should represent the modern India, while the IFSC Authority will focus on ease of operations, access, and flexibility for participation in IFSC. ‘
“The approach would be to provide stability, certainty, and clarity in the regulations. We will ensure business friendly environment for global investors. The Government of India has already relaxed requirement of income tax ID for foreign investors in AIFs and Foreign Portfolio Investors have been given access to IFSC without any additional documentation. We will continue to create simpler KYC norms without compromising AML requirements,” he explained.
Helping India achieve the $5 Trillion GDP dream
As India’s demand for international financial services is huge grows, the IFSC seeks to create a platform for raising capital and debt for the country.
“GIFT IFSC will become a hub for offshore funds for investment in India and globally. We are developing business regulations for Aircraft leasing & financing activities in IFSC and we will be hosting India’s first International Bullion Exchange that will set a single price across country for gold and ultimately, it has potential to set the price globally,” said Mr. Srinivas.
India’s major advantage is the demand for international financial services from the hinterland. In the absence an IFSC in India, global investors have been using alternate locations for investment in India and other Asian countries.
Speaking of the future plans for the IFSC, Mr. Srinivas said “We foresee major investments, banking and reinsurance business moving to GIFT IFSC. Large multinational banks such as Standard Chartered Bank, HSBC have recently set up IFSC Banking Unit at GIFT City. We are creating regulations to attract Global in-house Centres for international financial services operations. India has inherent advantage of availability of talent and low cost of operations which will attract global financial services firms to Indian IFSC.”
Plans for the future
GIFT IFSC has already created a strong base for developing international financial services activities. In a move to bring trading of Rupee (INR) derivatives back onshore from other global markets, GIFT IFSC enabled trading in these instruments this year.
“We are planning to attract more investment products such as ETFs, REITs and GDRs for listing at IFSC Exchanges. The Alternate Investment Fund regime is now attracting huge interest from India centric funds, further operating guidelines for Portfolio Management Services would be issued shortly. We would also like to bring the framework for offshore Mutual Funds,” Mr. Srinivas said, adding that “GIFT IFSC has a huge potential to become a platform for Green Financing and we are very keen to attract investments in this segment.”
The Bloomberg Access India Dialogue is an exclusive series featuring in-depth conversations with pre-eminent thought leaders on the opportunities and challenges ahead as India charts its course towards the $5 trillion GDP aspiration.