Expert panel set up to help bring back foreign-domiciled fintech startups to India’s GIFT City
The International Financial Services Centers Authority (IFSCA) announced on March 21 that it has set up an expert committee to identify a roadmap to encourage Indian fintech startups domiciled abroad to relocate to India, particularly to the International Financial Services Center (IFSC) in POISON City , Gujarat.
“The Indian startup ecosystem is the third largest startup ecosystem in the world, with an impressive 115 unicorns […but] many Indian startups are domiciled outside India – despite the fact that most of the market, personnel and founders are in India. These ‘outsourced’ or ‘flipped’ startups make up a large number of India’s unicorns.” — IFSCA
“To better understand the nuances from regulatory, tax, legal and other perspectives and identify measures required to make India the preferred location, IFSCA has constituted an expert committee to formulate a road map to turn the Indian innovation into GIFT IFSC onshore ,” the authority says. tired.
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What is GIFT IFSC: Established by the Government of India in 2015, the International Financial Services Center (IFSC) is located in GIFT City, a Special Economic Zone (SEZ) in Gandhinagar, Gujarat. It is designed for financial institutions that serve non-residents and handle foreign currency.
Institutions setting up shop in the IFSC enjoy certain tax benefits as well as light touch provisions. These benefits are aimed at attracting foreign financial institutions to set up in India, as well as convincing Indian financial institutions to operate out of the country instead of setting up offshore banking units.
The IFSCA is the single authority for the regulation of companies in the IFSC, and has the combined powers of the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA.)
Why is this important: Despite the various benefits it provides, there is a lack of awareness about GIFT City. After the Silicon Valley Bank (SVB) crisis, India’s IT minister met affected Indian startups to hear their concerns. In the meeting, the minister had asked why startups were not banking with Indian or foreign banks located in GIFT City. The founders complained about the lack of awareness of GIFT City or worried about excessive compliance requirements. Many of you readers probably haven’t heard or don’t know much about GIFT City either.
What is the committee’s job: The committee’s mandate includes:
- Identify “measures required to encourage Indian Fintech/Startups domiciled abroad to move to GIFT IFSC.”
- Identify “issues critical to the development of GIFT IFSC as a Global Fintech Hub”
- Propose “measures to encourage emerging Fintechs with global prospects to set up their commercial presence in GIFT IFSC”
- Identify “challenges and recommend measures for development of International Innovation Hub at GIFT IFSC.”
The committee is expected to submit its recommendations to IFSCA within three months.
Who are the members of the expert committee: According to the committee’s website, the following people will be part of the committee:
- G. Padmanabhan, Ex. Managing Director, RBI – Chairman
- Dipesh Shah, Managing Director, IFSCA – Member
- Nishith Desai, Founder, Nishith Desai Associates – Member
- Anjali Bansal, Founder, Avaana Capital – Member
- Siddharth Pai, Founder and CFO, 3one4 Capital – Member
- Lalit Keshre, Co-Founder and CEO, Groww – Member
- Nikhil Kamath, Co-Founder, Zerodha – Member
- Anjani Sharma, Partner, Financial Services, BSR & Co LLP – Member
- Sandip Shah, General Manager, GIFT City Ltd. – Member
- Ankit Bhansali, Dy. Managing Director, IFSCA – Member Secretary
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