Budget 2023: GIFT IFSC receives major boost

GIFT IFSC (International Financial Services Centres) received a major boost in the Union Budget 2023 with Finance Minister Nirmala Sitharaman indicating that a number of measures will be undertaken to enhance business activities in the global financial hub.

The IFSCA or the International Financial Services Centres Authority will be delegated power under the SEZ Act to “avoid dual regulation”. Additionally, a single-window IT system will be set up for registration and approval of IFSCA, SEZ  GSTN, RBI, SEBI and IRDAI authorities.

Further, the finance minister, in her speech, also indicated that provisions permitting acquisition financing by IFSC banking units and foreign banks will be unveiled. It has also approved the establishment of a subsidiary of EXIM bank for trade refinancing.

"Permitting acquisition financing by units of foreign banks in IFSC is a step in the right direction and would help in reducing the cost of financing outbound M&A, thereby supporting Indian corporates looking to do overseas acquisitions," said Samir Sheth, Partner and Head - Deal Advisory Services, BDO India.

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The finance minister also indicated that a slew of statutory amendments is in the offing. These include amending the IFSCA Act for statutory provisions for arbitration, and ancillary services and for avoiding dual regulation under the SEZ Act. Additionally, these amendments will also recognise offshore derivate contracts as valid contracts.

It is proposed to amend clause (b) of the Explanation to clause (viiad) of section 47 of the IFSCA Act to extend the date for the transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund in case of relocation to 31 March 2025 from current limitation of 31 March 2023.

Additionally, the definition of "specified fund", "resultant fund" and "investment fund" as stated in the IFSCA Act is proposed to be amended to align it with the reference given in the IFSCA (Fund Management) Regulations, 2022 which came into force from May 2022.

Lastly, for countries looking for data continuity solutions, GIFT IFSC will also facilitate the setting up of data embassies.