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Several Indian asset managers have revealed their intentions to shift some of their offshore fund operations from financial hubs like Dubai and Singapore to a finance center in the western state of Gujarat, aiming to enhance their access to India's capital markets.
The Indian government is actively promoting the Gujarat International Finance Tec-City, commonly known as GIFT City, as a pivotal "gateway for global capital and financial services" for the nation's economy. To lure companies, the government is offering tax breaks and other incentives.
In the past six months, around eight out of the ten largest Indian asset managers, based on assets under management, have either relocated their businesses, established new funds, or initiated processes to transition to GIFT City, according to executives from these firms.
Swarup Mohanty, the chief executive of Mirae Asset Investment Managers, explained, "The stable regulatory regime and proximity to the Indian markets are key factors driving our decision." The company has moved a $200 million fund based in Hong Kong to GIFT City and is actively considering relocating a second fund.
Mirae Asset Investment Managers represents the Indian arm of South Korea's Mirae Asset Financial Group and anticipates managing $435 million from GIFT City in the near future. The firm currently oversees assets worth 1.46 trillion Indian rupees ($17.58 billion) in India.
GIFT City provides a 10-year tax exemption to companies establishing their presence there and does not levy taxes on fund transfers from overseas jurisdictions. Additionally, there are no capital gains taxes for investments made in units set up within GIFT City, akin to tax structures in Singapore or Dubai.
Sachin Samant, president of the banking and financial institutions group at Kotak Mahindra Bank, highlighted the cost advantages of running funds in GIFT City compared to locations like Mauritius and Singapore, citing lower living costs, rentals, and labor expenses. Kotak Mahindra Bank operates an office in GIFT City and assists funds in setting up their operations there.
DSP Mutual Fund, which manages $20 billion in assets in India and offshore, intends to shift its Mauritius-based operation, managing $450-500 million in assets, to GIFT City by March, according to Jay Kothari, a senior vice-president.
Aditya Birla Sun Life AMC, India's sixth-largest asset manager with 3.08 trillion rupees under management, is also relocating operations from Dubai and Singapore to GIFT City. "Apart from multiple inbound funds, we have one outbound fund and have approval to establish an ESG-focused fund with seed investment already secured," remarked A. Balasubramanian, chief executive of Aditya Birla Sun Life AMC.
According to data from the International Financial Services Regulatory Authority (IFSCA), which oversees financial services in GIFT City, over 80 fund managers with commitments totaling $30 billion and investments exceeding $2.93 billion have set up operations in GIFT City over the last three years.
(1 USD = 83.0290 Indian rupees)