Context
On 12 November 2020, the International Financial Services Centres Authority (IFSCA) notified its Global In-House Centres (GIC) Regulations to provide a framework for recognition and operation of GlCs. This will enable multinational companies (MNCs) to set up GICs in Gujarat International Finance Tec-City (GIFT City), Gandhinagar for outsourced business functions while leveraging the benefits of cost savings accompanied by improved productivity and high-quality service. (A copy of GIC Regulations is attached with this blog)
While the GIC Regulations entails the registration process, functioning and operational requirements for a GIC, the IFSCA has also issued a circular, prescribing the format of application form for seeking registration as a GIC and the annual reporting requirement for a GIC.( A copy of the circular has been attached with this blog. Please read it carefully. It has details of IFSCA officials who can be contacted for GIC/GCC related queries.)
In order to discuss the new policy developments, NASSCOM organized a roundtable interaction on ‘Emerging Opportunities for Global Capability Centres (GCC) in new regime at GIFT SEZ IFSC’. The roundtable held on 18 December 2020, witnessed participation of various industry experts and officials from GIFT City and IFSCA. In this interactive discussion, teams from IFSCA and GIFT City engaged with participants on the regulatory, infrastructure and other relevant developments in the International Financial Services Centre (IFSC) and got feedback from the industry.
Highlights of the Discussion:
- GIFT City and IFSCA officials highlighted the features of the new regulatory ecosystem backed by excellent physical infrastructure developed in Gujarat. The incentives and benefits offered by the state government of Gujarat during business operations was discussed along with the availability of talent pool and related employee costs, indirect tax and other state incentives.
- A ‘GIC’ in IFSC can provide services, directly or indirectly, to entities within its financial services group, including but not limited to banks and non-banking financial companies, financial intermediaries, investment banks, insurance companies, re-insurance companies, actuaries, brokerage firms, funds, stock exchanges, clearing houses, depositories, and custodians, for carrying out a financial service in respect of a financial product.
- Regulatory and tax regime for GIC/GCC units was discussed at length. Eligibility criteria and process for setting up office in GIFT IFSC was explained through detailed presentation.
- Queries pertaining to being eligible for the benefits discussed while operating in a different city, say, Bengaluru or Pune, was addressed. It was clarified that only entities operating through the physical setup of GIFT City would be allowed to avail the benefits.
- The existing GCCs present in the panel shared their experiences of what worked for them and what did not. This would enable upcoming GCCs to not repeat the same mistakes.
- Geographical location advantages while setting up GIC/GCCs were also discussed. Provision of International communication system for the GICs and ensuring high-end hospitality units in the city, was suggested.
- There was a suggestion to consider setting up of IFSCs in other states as well.
- GCC is evolving to go up the complexity and value chain, hence, it was suggested that the focus should be on establishing various capabilities and skill set among talent to combat front to back integration.
Way Forward
- NASSCOM will keep driving the engagement with IFSCA and serve as the link between the industry and the regulator.
- A suggestion to setup a Task Force for GCCs was made during the roundtable. We are happy to discuss this further and finalize this.
For any details on this event or for any other inputs, please write to komal@nasscom.in
About IFSCA
The Government of India established International Financial Services Centres Authority in April 2020 under the Act passed by the Indian Parliament. For the first time, the regulatory powers of four financial services regulators in India, namely, Reserve Bank of India (RBI), Securities & Exchange Board of India (SEBI), Insurance Regulatory Development Authority of India (IRDAI), Pension Fund Regulatory Development Authority of India (PFRDAI), have been vested in IFSCA with respect to regulation of financial institutions, financial services and financial products in the IFSC, making it a unified regulator for the IFSC.
Useful Links
https://ifsca.gov.in/Regulation?MId=0EqZaxg1yfA=
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