In the ever-evolving landscape of international business, strategic hubs that offer stability and promote growth opportunities become magnets for corporations seeking expansion and a secure destination amidst economic uncertainties. One such beacon is India’s GIFT City (Gujarat International Finance Tec-City), a visionary project aimed at “onshoring the offshore”. Since its inception in 2015, GIFT City has made rapid strides towards making India a global financial powerhouse. Home to aviation, IT, and finance industry.
GIFT City and International Financial Service Centre (IFSC) set-up within the GIFT City is a testament to India’s multi-faceted ambition of establishing itself as a global economic and financial powerhouse. Hosting a diverse array of industries, the city has become a hub for aviation, IT, and finance. More than 140 entities, including financial powerhouses like Morgan Stanley, MUFG Bank, Bank of America, BNP Paribas, JP Morgan, and Deutsche Bank, alongside tech giants such as Google and Capgemini, have already set-up units in GIFT City, creating both an inbound and outbound gateway for International financial services.
The presence of global giants will lead to a surge in employment opportunities across various sectors. Skilled professionals, both from India and abroad, are drawn to GIFT City’s promising prospects, resulting in an intellectual influx for the nation. The city’s focus on skill development and talent pool building will foster the overall socio-economic development of the region.
India is one of the world’s fastest-growing aviation markets and Indian aircraft operators have traditionally seen challenges around offshore financing and leasing, hindering growth. IFSC has notified aircraft leasing as a financial product, to build an indigenous financing ecosystem in India away from markets like Dublin.
GIFT City’s magnetic appeal to corporations lies in its distinctive status as a tax-effective access point to India’s large hinterland economy; as an experimental zone within India’s robust $3 trillion economy. Functioning as an International Financial Services Centre (IFSC), GIFT City operates as a delineated jurisdiction, exclusively providing financial services denominated in foreign currency. This innovative framework grants entities within GIFT City access to a robust regulatory environment, fostering a business-friendly climate. Within this unique ecosystem, companies enjoy a multitude of benefits, including attractive financial incentives such as tax exemptions, represented by the waiver of Goods and Services Tax (GST) and capital gain tax.
GIFT City’s ambitions transcend national boundaries, aligning with the Indian government’s vision to position it as a global leasing hub, drawing inspiration from successful models in Dubai, Ireland, and Singapore. In a strategic move to facilitate international operations, the government has implemented measures, including the establishment of a single regulator, aimed at simplifying operational complexities and enticing global players. In essence, GIFT City’s allure lies not only in its experimental approach to free markets but also in its proactive measures to create an international financial hub, setting the stage for increased global participation and positioning India as a formidable player in the world of finance.
What it implies for the commercial real estate sector in India
GIFT City is being developed as India’s first greenfield Smart City with world-class infrastructure and seamless connectivity. Currently, the masterplan for GIFT City envisages total development of 62 mn sq ft in Phase 1 segregated into commercial development of 42 mn sq ft (67%), residential usage of 14 mn sq ft (22%) and social amenities of 6 mn sq ft (11%). This development mix will ensure a balanced growth profile of GIFT City with a walk to work concept.
Occupier interest in GIFT City is driven by the favourable value proposition with entry rentals for Grade A buildings in the range of $0.6 to $0.9 per sq ft per month. The lower rentals, when combined with the government’s razor-sharp focus to improve the ease of doing business, provides the right impetus for large corporates seeking to set up a unit in GIFT City premises. While the market is nascent currently with limited ready stock, developers have demonstrated a nuanced understanding of the preferences of potential occupiers, providing incubation spaces and customising their product offerings to channelise demand effectively. This client-centric strategy ensures that office spaces align precisely with the stringent standards and specifications expected by major international tenants.
In the face of global economic challenges, including corporate layoffs and recessionary trends, GIFT City has showcased its resilience. While other regions grapple with the impacts of a global financial crisis, GIFT City remains a beacon of stability, drawing global MNCs seeking cost-effective solutions and a strategic foothold in the Indian subcontinent. GIFT City’s ascent to prominence within a relatively short span underscores India’s prowess in providing a conducive environment for international business expansion.
