GIFT City (Gujarat International Finance Tec-City) is driving India’s economic growth by attracting global investments, fostering financial innovation, boosting GDP, creating jobs, and promoting sustainable development – positioning India as a global financial hub.
India’s ascent in the global financial landscape is becoming increasingly prominent, with GIFT City playing a pivotal role. Leaping up from Rank 67 to Rank 57 in the Global Financial Centres Index 2024, it is emerging as a major player among international financial services hubs. This highlights not just GIFT City economic growth, but also its role in driving India’s economic progress.
GIFT City is more than just India’s first planned greenfield smart city; it represents a strategic vision of transforming the country into a global financial hub. By creating a conducive ecosystem, it has been attracting both international and domestic investors. With this, GIFT City contribution to GDP has been exponentially rising.
From generating employment to promoting global trade and financial innovation, its impact is undeniable. In this blog, we will explore the multifaceted ways in which GIFT City is driving India’s economic development.
Table of Contents
Understanding GIFT City
India’s first operational smart city and IFSC (International Financial Services Centre) is a planned business district designed to foster financial and technological services – with the goal of driving GIFT City economic growth through world-class infrastructure and seamless connectivity. The city aims to position India prominently on the global financial map by offering advanced services that promote international business activities.
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Location
The city is strategically located between Ahmedabad and Gandhinagar, along the banks of the Sabarmati River. This prime geographic location ensures excellent connectivity to major urban centres, access to key infrastructure, and growing GIFT City contribution to GDP – making it an ideal hub for international financial transactions & global trade and further contributing to GIFT City economic growth.
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Conceptualisation
Inspired by leading global financial hubs such as London, Dubai, and Singapore, GIFT City was envisioned as a benchmark for international financial services in India. The city focuses on financial innovation, green energy, and sustainable development – positioning India as a competitive global player.
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Key Stakeholders
GIFT City is a joint initiative supported by the Government of Gujarat and the Government of India. Various government bodies, financial institutions, and international investors are key stakeholders working together to create a robust regulatory framework and favourable business environment – that have been attracting global investments and ensuring long-term contribution to India’s GDP
GIFT City economic growth is playing a pivotal role in driving India’s GDP by fostering innovation, attracting global investments, and enhancing the country’s financial services ecosystem.
Read More: GIFT City – India’s Gateway to Global Financial Markets
7 Ways GIFT City Driving India’s Economic Growth
GIFT City is driving India’s economic growth in 7 key ways: growing contribution to GDP, strategic economic contributions, development of infrastructure & technology, generating employment & enabling skill development, enhancing the country’s global competitiveness, positive impact on environment & society, and excellent future prospects. Together, these factors position GIFT City as a key hub for economic transformation, significantly boosting India’s global financial presence.
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GIFT City Contribution to GDP
The ever-increasing GIFT City economic growth has the potential to contribute up to 1% of India’s GDP by 2025, according to the National Institute of Financial Management. The city’s primary sectors – banking, insurance, capital markets, and IT – play a crucial role, particularly through the International Financial Services Centre (IFSC) that facilitates global financial transactions.
Additionally, GIFT City contribution to GDP is based on the multiplier effect, wherein finance & fintech sectors support a range of ancillary industries such as real estate, logistics, hospitality, education, and healthcare.
By driving job creation in sectors such as IT, fintech, and construction, GIFT City economic growth stimulates broader financial activity within Gujarat and across India – thereby enhancing its overall contribution to the national economy.
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Strategic Economic Contributions
By attracting significant foreign direct investment (FDI), the city plays a vital role in GIFT City economic growth. Its business-friendly policies, including tax incentives and simplified regulations, make it an appealing destination for global firms. Major investments from companies like JP Morgan, Oracle, and Singapore Exchange (SGX) highlight its growing stature as a financial hub. These foreign investments are important for boosting GIFT City contribution to GDP.
The GIFT IFSC is central to the city’s success in expanding India’s financial services sector. By offering a unified regulatory framework for banking, insurance, and capital markets, it has enhanced international financial collaboration. This has boosted liquidity and investment opportunities – driving GIFT City economic growth, further strengthening GIFT City contribution to GDP, and positioning India as a key player in global financial markets.
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Infrastructure and Technology Development
GIFT City is renowned for its advanced smart city infrastructure that includes uninterrupted power, high-speed internet, and green building initiatives. These world-class facilities attract global businesses, contributing to GIFT City economic growth by providing an efficient and sustainable environment for MNCs.
Technology plays a key role in GIFT City’s development, particularly in the financial sector. With a focus on fintech and digital transformation, the city is driving innovation in banking, blockchain, and digital payments. This technological focus boosts operational efficiency and enhances GIFT City contribution to GDP, positioning the city as a leader in global financial services.
For instance, Singapore Telemedia operates a Tier IV data centre in GIFT City’s Domestic Tariff Area, featuring 825 racks and offering a range of services. Located within the GIFT IFSC area, Yotta’s AI-powered data centre serves as an advanced facility catering to users in India’s first International Financial Services Centre.
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Employment Generation and Skill Development
The city has become a key driver of employment, contributing to GIFT City economic growth by creating thousands of jobs across sectors like banking, IT, insurance, and real estate. The IFSC within GIFT City has been particularly instrumental in generating employment opportunities – with fintech, asset management, and construction sectors playing significant roles.
To support this job growth, GIFT City has launched many skill development initiatives in collaboration with educational institutions and industries. These specialised training programs focus on financial services, technology, and sustainable development. Such initiatives aim to build a skilled workforce capable of meeting the demands of the city’s expanding economic landscape, further contributing to GIFT City economic growth.
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Enhancing India’s Global Competitiveness
GIFT City is positioning India as a key global financial hub by providing world-class infrastructure, tax benefits, and competitive regulatory frameworks. It draws comparisons with other financial centres such as London, Singapore, and Dubai – enhancing GIFT City economic growth through international investments and trade. By integrating India into global financial networks, GIFT City has strengthened the country’s global financial presence
The regulatory environment in GIFT City simplifies business operations through tax incentives and streamlined compliance. This ease of doing business has improved India’s global rankings, attracting foreign and domestic investments. GIFT City contribution to GDP is further enhanced by creating a business-friendly ecosystem that supports economic growth and positions India as a competitive player on the world stage.
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Environmental and Social Impact
GIFT City focuses on eco-friendly infrastructure with green building practices and energy-efficient systems. The city incorporates India’s first automated waste management system, including a fully automated plant and pipeline collection network – contributing to a cleaner environment. Stretching over 17 km, the utility tunnel system enables a ‘digging-free’ city for easy maintenance and uninterrupted services.
With advanced smart water infrastructure, GIFT City provides 24/7 drinking water and near-zero discharge through sewage recycling, enhancing the city’s sustainability efforts. These initiatives not only reduce environmental impact, but also drive GIFT City economic growth by attracting businesses and residents with eco-conscious values.
Source: GIFT City official website -
Future Prospects and Growth Trajectory
The Finance Act 2023 has introduced many strategic initiatives to propel the future growth of GIFT City. One significant change is the tax-neutral transfer of offshore funds owned by entities like the Abu Dhabi Investment Authority to the GIFT City IFSC.
Alternative Investment Funds (AIFs) set up in the IFSC are now exempt from angel tax, which applies to non-listed Indian companies, enhancing their appeal. Offshore Banking Units (OBUs) will benefit from 100% tax holiday starting April 2023, further strengthening GIFT City economic growth.
Additionally, the dividend distribution tax for IFSC units has been reduced to 10%, compared to 20% for non-IFSC companies, attracting non-resident investments. Interest income from long-term bonds listed on IFSC stock exchanges also enjoy concessional withholding tax rates, further boosting GIFT City contribution to GDP. These reforms have created fertile ground for growth, ensuring GIFT City continues to evolve as a global financial hub.
Source: blog by Hubbis – a community for wealth management professionals in Asia
Conclusion
The city is a key driver of India’s economic transformation, contributing significantly to GIFT City economic growth through financial innovation, infrastructure, and sustainability initiatives. It has become a key part of India’s economic growth by attracting global investments, fostering financial innovation, generating employment, enhancing infrastructure, promoting sustainable development, offering tax incentives, and facilitating international trade.
All these factors highlight GIFT City contribution to GDP, which is expected to rise significantly in the coming years. As the city continues to expand, it is set to play an even larger role in positioning India as a global financial hub, promoting sustainable urban development and inclusive growth. Stay updated on GIFT City economic growth as it boosts India’s GDP in the near future.
Read More: What Facilities are Available in GIFT City?
FAQs
1. What is GIFT City, and where is it located?
GIFT City, or Gujarat International Finance Tec-City, is India’s first operational smart city and International Financial Services Centre (IFSC). It is located between Ahmedabad and Gandhinagar, on the banks of the Sabarmati River in Gujarat.
2. How does GIFT City contribute to India's GDP?
GIFT City contributes to India’s GDP by fostering financial services, attracting foreign investments, and promoting fintech innovation. It serves as a global business hub, providing companies with favourable environment through tax incentives and regulatory benefits, which in turn increases financial activity, increases GIFT City economic growth, and boosts the country's output.
3. What financial services are offered within GIFT City?
Financial services offered within GIFT City are banking, insurance, asset management, and securities trading. The city hosts international exchanges and is a centre for alternative investment funds (AIFs), private equity, and venture capital. The financial ecosystem is supported by GIFT IFSC that enables international financial transactions in a regulatory framework designed for global businesses.
4. How is GIFT City attracting foreign investment?
GIFT City is attracting foreign investment by offering a business-friendly environment with tax incentives, regulatory exemptions, and streamlined compliance processes. Companies setting up operations here benefit from exemptions in corporate tax, GST, and reduced regulatory burden – making it a competitive destination for global financial services & investment and increasing GIFT City economic growth.
5. What is the role of GIFT IFSC in enhancing India's financial sector?
The role of GIFT IFSC in enhancing India’s financial sector is pivotal, as it provides a global platform for financial services – facilitating international trade & investment and offering financial products like derivatives, insurance, and asset management. It enables India to compete with other international financial centres, boosting the country's standing in global finance.
6. How does GIFT City support employment generation?
GIFT City supports employment generation by creating a multitude of jobs across various sectors such as banking, insurance, real estate, IT, and construction. As companies set up their operations here, they generate thousands of direct & indirect jobs – boosting national employment levels and GIFT City economic growth.
7. What makes the infrastructure of GIFT City unique?
What makes the infrastructure of GIFT City unique are the world-class facilities such as uninterrupted power supply, high-speed internet, sophisticated waste management system, advanced telecommunications, and more. Its smart city design integrates sustainable practices such as green buildings and renewable energy, making it a benchmark for future urban developments in India.
8. How is technology driving economic growth in GIFT City?
Technology is driving economic growth in GIFT City through the development of fintech solutions, smart city innovations, and digital infrastructure. The city fosters innovation in financial technology by offering dedicated fintech sandboxes, encouraging startups, and facilitating international collaborations in the tech sector – also boosting GIFT City economic growth.
9. What are the long-term growth prospects for GIFT City?
The long-term growth prospects for GIFT City are excellent, with ongoing investments in infrastructure, policy reforms, and international partnerships. Its strategic location, business-friendly policies, and focus on innovation position it for sustained growth – potentially helping it become a major global financial hub in the coming years.
10. How does GIFT City position India as a global financial hub?
GIFT City positions India as a global financial hub by offering a competitive environment for international financial services, attracting global players, and facilitating cross-border trade. GIFT City IFSC allows the country to compete with established financial centres like London and Singapore, increasing GIFT City economic growth and boosting India’s global influence.
