Bulking up IFSC

A wide-ranging and ambitious expansion of its remit is expected in the Budget

- SUBHOMOY BHATTACHARJEE

The Budget next month is expected to announce a troika of measures that Finance Minister Nirmala Sitharaman hopes will be read as India's biggest set of measures to draw in foreign capital. These are: the inclusion of India government bonds in global indices; expansion of the scope for rupee convertibility; and wide-ranging expansion of the International Financial Services Centre (IFSC) at Gandhinagar, Gujarat.

These have been fine-tuned for some time and have now come together. Of these, the most ambitious are the steps involving the IFSC. The troika is also significant since the government has raised foreign direct investment (FDI) limits in different sectors already, and given the huge fiscal deficit that will persist for years, can scarcely allow any new tax set-offs to attract investments from abroad.

GIFT City-IFSC, the foundation stone of which was laid in 2012, comes 76th on the list of the commonly used global index of the scale of business of international financial centres, 20 ranks behind even Mumbai (the index is published annually by the Z/Yen Group in partnership with think-tank China Development Institute). Singapore, for instance, ranks fourth. But with the scale of support coming in now, these distances could shorten fast.

The lure of the three measures surrounding the IFSC is that they are cash-neutral for the treasury but hopefully tempting enough for investors anywhere to take a bite.