According to people close of the development, this city would house the offices of investment firms. The regulations would be milder in comparision with those mandated by the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and the Forward Markets Commission.
Read our full coverage on Union Budget
“Not all financial firms will be allowed to function in the gift city in the first phase but only those that would not require amendments in the present (Foreign Exchange Management) Act,” said a source close to the development.
Even regulators may be required to have their back office in the gift city. The regulators, under the chairmanship of the Financial Stability and Development Council, have started formulating the rules, to be called the Indian Financial Centre Regulations. These regulations would vary in tax treatment, currency, trading and securities regulations.
BSE Ltd has already signed a memorandum of understanding to start operations in the city, with a commitment of Rs 200 crore.
During the United Progressive Alliance government, this centre was envisaged in Mumbai and a blue print was in place.
A high-powered committee, under the chairmanship of Percy Mistry, former World Bank economist, had recommended a slew of measures to make Mumbai an international financial centre in 2007. These included full capital account convertibility, abolition of securities transaction tax, stamp duties, pruning of public debt, no restriction on foreign investment in sovereign bonds and introduction of goods and service tax on financial services.