After the finance ministry responded to the local member of Parliament’s proposal to set up an International Financial Centre (IFC) in Chandigarh, modelled on the Gujarat International Finance Tec-City in Gandhinagar, citing the precedent of developing one GIFT City centre at a time, Manish Tewari said Punjab governor and UT administrator Gulab Chand Kataria should take up the matter with the Centre before proceeding with the plan.
To bolster the region’s economy and elevate India’s position as a global financial powerhouse, Tewari, in December last year, had written a letter to Union finance minister Nirmala Sitharaman with his proposal.
He had pointed out how Chandigarh’s geographic positioning as the joint capital of Punjab and Haryana, coupled with its proximity to Himachal Pradesh, placed it at the heart of North India’s economic matrix.
During his Independence Day speech, Punjab governor and UT administrator Gulab Chand Kataria had also announced the proposal to set up the centre in Chandigarh.
Following this, the UT administration initiated steps to establish the proposed Chandigarh International Finance-Tec City in Industrial Area, Phase 3, spread over nearly 153 acres.
Deputy commissioner and industries secretary Nishant Kumar Yadav had recently attended a NITI Aayog event, where he shared that preparations were underway to appoint a consultant to conduct feasibility study of potential sectors, benchmarking of the GIFT City model, regulatory and infrastructure gap assessment, and Master planning and preparation of the detailed project report (DPR).
However on Sunday, the Union ministry said, “The Special Economic Zones (SEZ) Act, 2005, provides that the central government may approve the setting up of an IFSC in an SEZ and prescribe the requirements for setting up and operation of such a centre. GIFT SEZ Ltd was the first entity to apply and receive a licence for setting up of an IFSC and it received the licence in 2011. It could, however, start operations only in 2015 when the ministries and regulators concerned issued guidelines for banking, capital markets and insurance businesses in the IFSC.”
{{/usCountry}}However on Sunday, the Union ministry said, “The Special Economic Zones (SEZ) Act, 2005, provides that the central government may approve the setting up of an IFSC in an SEZ and prescribe the requirements for setting up and operation of such a centre. GIFT SEZ Ltd was the first entity to apply and receive a licence for setting up of an IFSC and it received the licence in 2011. It could, however, start operations only in 2015 when the ministries and regulators concerned issued guidelines for banking, capital markets and insurance businesses in the IFSC.”
{{/usCountry}}“Globally, one can find only one international financial centre in a country. This is done to maximise the efficiency gains and for optimum utilisation of resources. The reason for this strategy is that the mainland activities are not affected by the offshore activities. This provides an easy mechanism for the regulator to monitor one location and keep upgrading regulatory infrastructure at the said location. As stated by former finance minister Arun Jaitley on the floor of the Lok Sabha in 2017, there is a limit to how many IFSCs can be set up and since GIFT City is already under development in Gandhinagar, Gujarat, there is a need to first optimally utilise GIFT City before considering other requests,” the ministry added.
With the UT administration having already initiated work on the centre, Tewari on Sunday said, “In such a case, before spending money on hiring a consultant or doing the leg work, the Punjab governor (who is also the UT administrator) must speak to the finance minister first as to whether the Union government has any appetite for another GIFT City or not. Also, the parliamentary standing committee of finance, of which I am a member, would be reviewing the functioning of GIFT City in Mumbai on September 2.”