As the new state government gets going, the spotlight is firmly on projects planned to change the face of Mumbai — from transport to infrastructure. But one that’s been virtually forgotten is the plan to turn the city into an international financial centre (IFC).
It was about five years ago that talk of turning Mumbai into an IFC, along the lines of London and Tokyo, first began doing the rounds. And that’s where it all ended — other than a few meetings and a report by an empowered committee, nothing was done to turn that dream into reality.
In the meantime, neighbouring Gujarat did everything that Mumbai couldn’t — from removing bottlenecks to ramming through crucial reforms — to put its own plan for a financial centre on the fast track.
The result: The Rs 70,000-crore Gujarat International Finance Tec-City (Gift) is on course to steal Mumbai’s thunder. Gujarat’s long-term vision is to convert Gift into a South Asian IFC that counts.
So, where did Mumbai go wrong? Though it has the historical advantage of being Indian’s financial capital, infrastructure bottlenecks, expensive real estate, the space crunch, access to accommodation and the lack of a world-class mass transport system are huge drawbacks.
The Centre set up a high-powered committee headed by former World Bank economist Percy Mistry to look at how Mumbai could become an IFC. The committee submitted its recommendations in 2007. “We have started implementing the recommendations on civic governance. Work on improving infrastructure has begun. However, financial policy decisions like rupee convertibility — a vital step in making Mumbai an IFC — have to be taken by the Centre,” said Maharashtra Chief Secretary Johny Joseph.
Spot the difference
“We achieved nothing in the last five years,” said a frustrated Vijay Mahajan, former CEO of Bombay First, a corporate sector initiative to turn Mumbai into a world-class city. “There were several initiatives from the corporate sector, but there was no government interest. That’s why I quit.”
Mahajan lobbied hard to get Mumbai IFC status, but in vain. “There is no planning, no long-term vision for Mumbai. The empowered committee, which studied the issue in fragments, gave a report last year stating that such a centre in Mumbai was not possible. After that, what steps did the state take?” said Mahajan.
Mahajan said this governmental apathy was the difference between Maharashtra and Gujarat. “Gujarat has the vision and the determination. It will overtake Mumbai because somebody there is taking the initiative,” he said.
Gujarat, famed for its businessmen, has left no stone unturned to ensure that Gift is an instant success. The implementing agency is incorporating everything that would be required by financial institutions and their executives.
Pulling out all stops
A public-private initiative, Gift will start off as a finance hub providing back-office facilities to premier financial institutions. There will be ample quality real estate and manpower, and it would scale up its operations by 2020 to bid for IFC status.
“We are excited by India’s potential. Gift will be our guiding light. While Central policy changes are yet to happen, Gift will be ready and in the best position to meet IFC criteria,” said a senior Gujarat bureaucrat requesting anonymity.
But even without IFC status, there is a huge domestic market to be served. A lot of front-end and back-end operations are planned.
Gift was conceived two years ago to provide the best working environment to financial institutions. About 550 acres were acquired in the Ahmedabad-Gandhinagar region on the banks of the Sabarmati without any of the turmoil witnessed in Singur and Ratnagiri. The fencing is complete and land-levelling is under way. The project has received several clearances and the first phase is expected to be up and running by 2012.
Gift will have 143 million sq ft of built-up area, of which 91 million sq ft will be above-ground. There will be 61 highrises, of which three will be 350 mt high, 27 will rise 150 mt and 31 will be 100 mt tall.
A 50:50 joint venture between Gujarat Urban Development Company Ltd and IL&FS, Gift will cater to finance and IT-enabled services. Much of the investment will be from the private sector, mostly realty and infrastructure firms.
“We will provide high-quality working spaces and lifestyles for people working and staying here. This is what financial players look for. Our infrastructure is unique. For instance, we are creating a zero-accident location that is based on the walk-to-work concept,” said Sunil Bahl, CEO of Gift.
There will be no private transport on surface areas. There will be a mass transportation system, underground facilities for utilities and parking. There will be riverfront entertainment, a residential area and towering office buildings giving it an international look.
Big boys at play
“We will start construction later this year. Over 100 agreements have been signed with realty and infrastructure firms. By 2020, we expect five lakh people to work in Gift; of these, 50,000 will stay in the township,” Bhal said.
All the realty big boys — DLF, Hiranandani, Raheja and Shapoorji Pallonji — have committed to investing in Gift. Financial top guns like Kotak Mahindra Bank, State Bank of India and ICICI have also committed to the project.
Most of Mumbai’s top businessmen are Gujaratis and Gujarat is banking on them, apart from the fact that the state boasts the highest number of chartered accountants and company secretaries in India. Considering the huge manpower required, several educational institutions in Gujarat have started offering training in accountancy and finance.
“Over Rs 100 crore has been spent on Gift and we are working overtime to make it happen,” said a senior executive of Gujarat Urban Development Company.
“Gift has gone beyond its original goal and will be the region’s central business district. It will be the focal point of India’s booming financial services market by providing companies with all those things Mumbai is still developing — comprehensive infrastructure, power, virtualised office space and a well-designed and expandable urban form,” said Kamlesh Trivedi, an analyst from Ahmedabad who is monitoring the project.
It was in 2003 that Manmohan Singh, then a senior Congress leader, expressed a desire to see Mumbai become an IFC. That was when Bombay First took up this issue.
Eventually, a task force was set up and a citizens’ action group constituted to expedite the process. In 2007, then finance minister P Chidambaram spoke in his Budget speech about making Mumbai an IFC. The empowered committee was set up, a report tabled… And then the dream was buried.
As Gujarat surges ahead, time is running out and Mumbai may have to eat humble pie. In the past, the Indian Institute of Management and the National Institute of Design, originally planned for Mumbai, moved to Ahmedabad due to lack of political will and regionalism. The Indian School of Business also opted for Hyderabad.
If Mumbai doesn’t learn fast, it could lose more.