Standing Committee on Finance: Recommendations for IFSCs
The Standing Committee on Finance has recommended that the government explore region-specific models for establishing new International Financial Services Centres (IFSCs) in other major metro cities. This aims to integrate India into the global financial services landscape.
Key Recommendations
- Focus on GIFT City: The committee emphasizes the importance of maintaining GIFT City as the core hub for financial services.
- Satellite Financial Zones: Establish satellite financial innovation zones or fintech clusters in other major cities to foster inclusive growth, develop talent pools, and attract diverse investors, contributing to the goals of Viksit Bharat.
GIFT-IFSC Overview
- The GIFT-IFSC in Gandhinagar, Gujarat, is currently India's sole IFSC.
- Other major economies, including some BRICS nations like China, have multiple centers, with China having 10 IFSCs.
- The International Financial Services Centres Authority (IFSCA) was established on April 27, 2020, under the IFSCA Act, 2019, to promote ease of doing business and provide a world-class regulatory environment.
Government's Position
- The finance ministry stated that globally, usually only one international financial centre exists in a country for optimal resource utilization.
- This strategy ensures that mainland activities are unaffected by offshore activities, providing a simplified regulatory monitoring mechanism.
GIFT-IFSC's Global Financial Centres Index Ranking
- The GIFT-IFSC has improved its ranking on the Global Financial Centres Index (GFCI 37) to 46th place out of 119 financial centres, up from 52nd place.
Panel's Suggestions for Improvement
- Streamline policies further.
- Improve transparency.
- Foster financial education.
- Enhance digital infrastructure.
- Utilize regulatory sandboxes.
- Simplify taxation regimes.
- Reduce compliance burden.
These measures are suggested to help GIFT-IFSC position itself as a premier global financial hub in the future.