How is GIFT City Changing Indian Start-Ups?

Introduction

The Indian startup ecosystem has changed a lot in the last few years. Thanks to initiatives like the Startup India initiative, entrepreneurs are now looking to develop innovative start-up ideas, apply for start-up loans, and meet the financial challenges associated with start-ups. One of the key players in the startup ecosystem is GIFT City. Spread over 886 acres, GIFT City is equipped with the latest technology. GIFT City not only caters to the needs of major financial institutions but also plays an important role in strengthening Indian startups. In this article, we will explore how GIFT City is influencing Indian startups and creating a vibrant startup ecosystem.

The Rise of GIFT City

GIFT City, also known as Gujarat International Finance-Tech, is known as India’s first functional smart city and international financial services hub. The city has an enviable business environment, state-of-the-art infrastructure, and a wide range of financial services. This makes GIFT City an ideal location for start-ups and business growth. Government initiatives such as tax breaks and ease of doing business have made GIFT City more attractive to business owners and start-ups alike.

Which Startups can be set up in GIFT City?

GIFT City is India’s first IFSC (International Financial Services Centre). The IFSC is a financial institution providing services primarily to customers outside the domestic economy, managing cross-border financial transactions, and providing financial products and services. The sectors that are allowed in GIFT City include Banking, Insurance, Capital markets, Fund management, Fintech/Tech Finance, and much more.

What are the Benefits For Startups In GIFT City?

1. Access to Funding Opportunities

GIFT City provides startups with millions of dollars in funding, a business-supportive environment, and a culture of innovation. Its ideal location encourages fellowship and collaboration, while proximity to the talent pool creates a steady supply of skilled workers.

2. Fiscal Benefits

From a tax perspective, start-ups can enjoy 100 % tax exemption every 10 years out of 15 years. In addition, the Minimum Alternate Tax (MAT) for corporations, or the Alternate Minimum Tax (AMT) for others as units of the IFSC, has been set at a competitive rate of 9% of book value;

3. Goods And Services Tax (GST) Benefits

There is no GST on services: (i) Charged at the unit of IFSC. (ii) For IFSC / SEZ units, offshore customers. Good and Service tax (GST) applies to services provided to the Domestic Tariff Zone.

4. Access to a skilled workforce

GIFT City has a highly skilled and highly educated workforce in the surrounding area, including engineers, accountants, and IT specialists, making it easier for startups to develop the talents required to grow and succeed.

What is the Role of GIFT City in India?

1. The expert committee suggested that India’s first international financial center, GIFT City in Gujarat, could play a vital role in bringing start-ups back to India and preventing many innovations from leaving the country.

2. The International Financial Services Center (IFSC) in GIFT City is designed to be a global financial center with reliable business regulations, competitive tax rates, and a business-friendly environment. In 2019, International was founded by the Finance Ministry (IFSCA) (IRDAI) and the Public Financial Regulatory Authority (PFRDA) – to set up and regulate IFSCs in the country.

3. GIFT IFSC is an offshore operation in the country and serves as a gateway for global capital flows in and out of the country. According to the report, flexibility to trade in foreign currencies, hassle-free movement of capital and funds, a business-friendly regulatory environment, reduced compliance burden, a tax system, attractive financial incentives, access to an ecosystem, and access to Fintech spaces

4. GIFT City-registered organizations are considered non-residents under FEMA regulations and enjoy a tax holiday of up to ten years with relief from GST, MAT, and tax filings. Binding organizations encourage the establishment of business in the city. Energy efficiency can also attract startups committed to environmental responsibility.

Conclusion

In conclusion, Gift City has played a pivotal role in the restructuring of Indian startups. The city’s focus on creating a supportive and conducive environment for start-ups, through the implementation of the Startup India initiative and other key initiatives, has positioned it as a leading hub for business development and resources as IFSC in Gift City continues to grow and expand its offerings. It is poised to accelerate growth, drive economic growth, and foster a culture of innovation and entrepreneurship across the country.