The International Financial Services Centres Authority (IFSCA)—the sole regulator for GIFT City, has taken certain steps to improve its reputation:
• It is identifying companies that hold licenses but have no real operations
• The inactive firms, particularly in the capital markets segment (brokers, fund managers), are urged to voluntarily surrender their licenses.
• it wants to make the operations in GIFT City like Singapore or Dubai, where Companies mandatorily need to have physical presence and actual business activities.
The need for such a step was noted primarily because GIFT City has over 1,000 registered entities, of which, many still have not hired staff, set up offices, or started trading. These Companies set up offices to exploit tax benefits.
Some exceptions have however been provided for legitimate delays by Companies like waiting for international regulatory approvals, geopolitical issues affecting a business launch or a sudden withdrawal of anchor investors.
The overall objective of the regulatory is to bring in more transparency in operations and making it more credible for international investors to come and invest here.
OUR VIEW:
As India gears up for major investments after the signing of the trade deals with the EU and the US, "Transparency in operations" will be the most important factor that will result in generation of Trust and hence will attract more Companies towards India. There have been efforts by the Ministry of Corporate Affairs to act against such dormant companies from its corporate registry. Such initiatives done in right earnest will improve the credibility and transparency in operations - mainly for the international investors that come to India for investing in coming months.
Link - GIFT City regulator clamps down on dormant companies | Stock Market News
"All comments are welcome. However, please note that they will be moderated to ensure no abusive content is posted."
