According to news agency Reuters, a number of Indian asset managers are moving their offshore fund operations from major financial centres like Dubai and Singapore to Gujarat International Finance Tec-City (GIFT City) in Gujarat.To attract companies, GIFT City, which is positioned as a global financial services hub by the government, provides enticing incentives like tax breaks.
According to the report, eight of the top ten Indian asset managers have moved their operations to GIFT City or are in the process of doing so in the last six months.The decision was largely influenced by the stable regulatory environment and closeness to Indian markets, according to Swarup Mohanty, CEO of Mirae Asset Investment Managers, who spoke with Reuters.
A $200 million fund based in Hong Kong has already been moved to GIFT City by Mirae Asset, a division of the South Korean company Mirae Asset Financial Group, and a second fund may be moved as well.
Why asset managers are moving to GIFT City?
Companies that establish operations in GIFT City are granted a 10-year tax exemption, and there are no taxes associated with the transfer of funds from foreign jurisdictions.Asset managers find GIFT City to be a desirable location because it does not impose capital gains taxes on investments made in units established there.
According to Sachin Samant, President of Kotak Mahindra Bank’s banking and financial institutions group, GIFT City offers more cost-effective fund management than other financial hubs like Singapore and Mauritius because of reduced labour, rental, and living expenses.
“Due to lower costs of living, rentals, and manpower, it is substantially more cost-effective to run a fund in GIFT City as compared to Mauritius and Singapore,” the Reuters report quoted him as saying.DSP Mutual Fund, one of the asset management companies that intends to move its Mauritius-based operation to GIFT City by March, is responsible for managing $20 billion in assets in India and offshore.
Senior Vice President of DSP Mutual Fund Jay Kothari emphasised this action as a component of their plan to take advantage of GIFT City’s advantages.In a similar vein, Aditya Birla Sun Life AMC, the sixth-biggest asset manager in India, is moving its headquarters from Singapore and Dubai to GIFT City. The CEO of Aditya Birla Sun Life AMC, A. Balasubramanian, stated in the report that GIFT City has established an ESG-focused fund with seed money already secured.
Over 80 fund managers have established operations in GIFT City over the last three years, with commitments totaling $30 billion and investments exceeding $2.93 billion, according to data provided by the International Financial Services Regulatory Authority (IFSCA). This wave of asset managers confirms GIFT City’s rising stature as India’s go-to location for financial services.
Because of its advantageous location, tax benefits, and supportive regulatory framework, GIFT City is attractive to both domestic and foreign investors as a means of accessing India’s capital markets.GIFT City is expected to become a major player in India’s financial scene by enabling easier access to and investment opportunities in the nation’s developing markets as more asset managers turn to it.
