Financial Services Authority Announced to Help Establish IFSC in Mumbai
Announcements in the union’s budget on tax incentives and an authority to regulate financial services in International Financial Services Centers (IFSCs) will boost the prospect of a proposed facility at the Bandra Kurla Complex (BKC) in Mumbai, have state government officials said.
Union Finance Minister Arun Jaitley announced the creation of a unified authority to regulate all services in IFSCs and tax incentives to promote stock exchange trading. Taxpayers other than companies operating in an IFSC will be charged an alternative minimum tax (AMT) at a preferential rate of 9% at par with the alternative minimum tax (MAT) applicable to companies.
A senior state government official claimed that the announcement would help the state government’s plans for an IFSC in the Bandra Kurla Complex (BKC) by creating an enabling environment.
The IFSC is one of the state government’s ambitious projects led by Devendra Fadnavis, which plans to develop it in a designated area of the BKC to help Mumbai’s transition to a global financial center. The state also helped set up the Mumbai International Arbitration Center (MCIA) to establish a dispute resolution mechanism for the success of the IFSC and ensure the ease of doing business.
Incidentally, in a response to Parliament last year, Jaitley said that another IFSC could be considered after the first one in Gujarat International Financial Tech (GIFT) City in Gandhinagar has been optimally utilized. After being at daggers drawn with the railways, the government of Maharashtra had to part with the land intended for the IFSC for the development of the Mumbai-Ahmedabad high-speed rail terminal for the high-speed train. His plans for an iconic tower were also affected by construction height restrictions due to the airport’s funnel area.
However, the official claimed that despite this, the project was on the right track. “The high-speed station will be located underground and will not hamper work on the IFSC,” he added.
“The idea is to create an area that will be largely outside the laws of the country … it will be like a financial SEZ,” another official explained, adding that Mumbai had more flexible capital, people with skills. and the presence of lawyers, banking and financial institutions and insurance companies as Gujarat.
However, former chief minister and top congressional leader Prithviraj Chavan said the IFSC plan was unclear and the project had yet to gain approval from the Center. “(The Center) wants to do the project in Gujarat and not in Mumbai because otherwise investors will prefer Mumba. You have to kill Mumbai to get GIFT up. This is the basic principle,” he noted, saying that the budget speech made no mention of the proposed IFSC in India’s financial capital.
“They are fooling people and there will be no IFSC in Mumbai,” Chavan accused.