Speaking at an event organised in collaboration with the Financial Planning Standards Board (FPSB) India on the World Financial Planning Day on 4 October, Dipesh Shah and Pradeep Ramakrishnan, executive directors at International Financial Services Centres Authority (IFSCA), talked about how GIFT City, primarily perceived as an investment destination, has much more to offer. It is not just for NRIs and global investors but resident Indians as well, they said.
This article delves into all that GIFT City has to offer.
Job opportunities
There are more than 700 IFSCA-registered entities at GIFT City as of September, in areas such as banking, capital markets, asset management, insurance, global treasury centres, and niche institutions such as aircraft leasing & financing, ship leasing & financing, and global treasury centres. The asset management industry is the largest, with 135 fund management entities, 154 alternate investment funds, four investment advisors, 17 portfolio managers and nine distributors. Most of these entities require compliance and principal officers.
Shah said, “Several regulatory measures taken at IFSCA have enabled new businesses, which in turn are creating job opportunities for financial professionals. As India builds its own global financial hub, the huge hinterland demand, competitive operating costs and availability of talent will help onshore several financial services.”
Also read | Family offices in GIFT City: In the eye of a storm?
For instance, IFSCA is emerging as a global accounting and taxation hub, which will open up huge outsourcing opportunities thanks to talent and cost advantages. “Bookkeeping, accounting, taxation and financial crime compliance alone could generate at least 50,000 jobs,” Shah added.
Fund management companies and others are also looking to hire compliance and principal officers who can operate from GIFT City. “Even if 150 such firms hire two to three key managers, they can easily absorb 500 financial professionals,” said Ramakrishnan.
IFSCA also offers licences for investment advisors and distributors. “Investment professionals looking to serve NRIs and other global investors can consider taking these licences to operate from GIFT City,” Ramakrishnan added.
FPSB India has collaborated with IFSCA to provide a steady stream of skilled certified financial planners to meet the demand from GIFT City’s financial industry. “Our aim is to cultivate a strong talent pool equipped with globally recognised expertise in financial planning that can serve the emerging demand for cross-border financial planning. GIFT City will play a huge role in facilitating this,” said Krishan Mishra, CEO, FPSB India.
View Full Image
Indian investors
An Indian resident who is eligible to move funds abroad under the Foreign Exchange Management Act (FEMA) can invest in products registered at GIFT City, albeit within the limit of $250,000 a financial year under the RBI’s Liberalised Remittance Scheme (LRS). This means resident Indians can invest in bonds issued by banks or foreign or domestic corporations.
They can also invest in global stocks denominated in foreign currency through unsponsored depositary receipts (UDRs) – a type of security that allows people to invest in a foreign company’s stock. INX Global Access offers a centralised trading platform for UDRs at IFSC, reducing the cost of accessing global equity markets.
The IFSCA is also drafting rules for short-term borrowing by corporations through commercial paper, and banks through certificates of deposits.
Also read: GIFT City regulator proposes lower PMS ticket size, opens door to retail funds
Just last month, it notified a new regulatory framework to allow Indian and foreign issuers to tap offshore investors by listing equity shares on the two stock exchanges at GIFT City. The move will especially benefit Indian startups, allowing them to raise funds from a bigger pool of investors. It will also allow foreign companies to issue shares that Indians can buy.
“GIFT City is not just for NRIs and global investors. Indian investors must explore products such as UDRs, primary market issuances under direct listing, CPs and bonds,” said Ramakrishnan.
Resident Indians can also open bank accounts at GIFT City to send money abroad in a simple and cost-effective way that avoids currency-conversion risk.
NRIs and global investors
Any entity at IFSC, GIFT City, is considered a non-resident under FEMA. Accordingly, any transaction between an IFSC entity and an NRI is considered non-resident-to-non-resident.
Several portfolio management services and alternative investment funds offer investment products to NRIs, helping them invest in either Indian or global markets. Currently the minimum ticket size to invest in AIFs is $1,50,000, but this is expected to drop to $75,000 in the near future.
Asset management companies have also launched feeder funds for such investors. For example, the Mirae Asset India Equity Allocation Fund is live for inbound investors (NRIs, foreign nationals and companies). Outbound products are under discussion.
NRIs can also consider opening savings accounts and making fixed deposits in foreign currency, depending on the bank’s terms and conditions. They won’t have to maintain NRE and NRO accounts in that case.
Also read: Mauritius keen to set up shop in GIFT City
NRIs can also buy dollar-denominated insurance from the IFSC. They can also set up family investment funds which, if efficiently structured, can help them with succession planning.
“Direct listing of Indian companies on stock exchanges in IFSC in due course will enable NRIs to explore Indian markets. Family investment funds can be set up for investment and succession planning. Proprietary trading is also an avenue for investment,” said Ramakrishnan. Proprietary trading, also known as “prop trading”, is when a financial institution or commercial bank uses its own money to buy and sell securities for profit.