OVERVIEW:

• GIFT City (Gujarat International Finance Tec-City), India’s pioneering International Financial Services Centre (IFSC), is quickly emerging as the top destination for foreign portfolio investors (FPIs).

• FPIs are increasingly favoring GIFT City, India’s premier IFSC, over traditional investment routes through Mauritius, Singapore, and other countries.

• This shift is largely driven by several key factors like:

PROACTIVE GOVERNMENT  SUPPORT:

• The Indian government is aggressively promoting GIFT City by offering exceptional tax incentives.

• Enhanced ease of doing business initiatives make it even more attractive.

• These efforts are encouraging FPIs to choose GIFT City over traditional investment routes like Mauritius, Singapore, Netherlands, or Luxembourg.

GUARANTEED TAX BENEFITS :

• GIFT City provides a ten-year exemption on any type of business income.

• This benefit is cemented in legal provisions, ensuring long-term stability and minimal risk of policy changes.

• The certainty of these exemptions is a significant draw for long-term investors.

COMPETITIVE EDGE OVER DTAAs:

• Tax benefits from countries like Mauritius and Singapore rely on Double Taxation Avoidance Agreements (DTAAs), which are subject to renegotiation.

• The potential for renegotiation adds an element of risk to these agreements, making them less reliable.

• GIFT City’s guaranteed benefits provide a competitive edge, reducing the appeal of DTA-based benefits from other jurisdictions.

OPERATIONAL EFFICIENCY:

• Beyond tax incentives, GIFT City offers streamlined regulatory processes, including a single-window clearance system.

• State-of-the-art infrastructure and connectivity enhance operational efficiency, making business setup and management simpler.

CONCLUSION:

• GIFT City is rapidly becoming the go-to investment hub for FPIs, thanks to its stable and lucrative tax benefits, supported by a robust legal and regulatory framework.

• The Indian government’s strategic initiatives to boost GIFT City’s appeal, combined with the diminishing reliability of traditional investment routes like Mauritius and Singapore, are driving this shift.

• With legal certainty, operational efficiencies, and a prime location, GIFT City is poised to be the premier destination for global investors.