If approved, the IFSC — proposed to be set up at the Bandra Kurla Complex (BKC) in the country’s financial capital — will be the second such centre in India after the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar.
On September 22, an inter-ministerial panel, including representatives from the ministries of finance and commerce among others, will take up the application for relaxing the minimum land norm of 50 hectares of contiguous and vacant land because what could be made available so far for the proposed IFSC at BKC is only 32 hectares of such land, official sources told The Hindu . The proposed IFSC at BKC will also be a multi-services Special Economic Zone (SEZ) like the GIFT City.
The commerce ministry has been roped in as it is the nodal body at the Centre for SEZ-related matters. While the guidelines concerning IFSC come under the purview of financial sector regulators such as the RBI, IRDA and SEBI as well as the finance ministry, the SEZ Act is also applicable in this case as IFSC is set up in an SEZ.
According to the SEZ Act, the Centre can approve the establishment of an IFSC in an SEZ and prescribe the requirements for its setting up and operation. However, the rider is that the Centre can approve only one IFSC in an SEZ.
The sources said giving a green signal to the proposed IFSC at BKC will not be an easy task at it will require an amendment to the SEZ Rules for which further inter-ministerial consultations will be needed in addition to circulation of a Cabinet note for approval of the Cabinet at a later stage.
They said within the government, there are now arguments for and against giving approval for setting up more than one IFSC in the country. Those against the proposal for a second IFSC in India (at BKC) have contended that examples from across the world show that most countries have been able to produce only one major international financial centre in their territory – for instance, London (U.K.), New York (U.S.), Tokyo (Japan), Zurich (Switzerland), Shanghai (China), Frankfurt (Germany), Singapore, Hong Kong and Dubai.
Therefore, it may not be feasible to have more than one IFSC in India especially since the GIFT in Gujarat took off as an IFSC only in March 2015, they said. Besides, if at all another IFSC has to be established, it should be in the south or another part of India as the IFSC at Gandhinagar (Gujarat) is not only situated close to Mumbai but is also well connected by air and rail. It will also be connected by a bullet train soon,they said. However, those favouring another IFSC have pointed out that the SEZ Act does not prohibit more than one IFSC in the country.