Gandhinagar:

In a major boost to the Insurance operations at India’s only operational International Financial Services Centre (IFSC) – Gujarat International Finance Tec City (GIFT IFSC) – the Insurance Regulatory Development Authority of India (IRDAI) has allowed it to undertake offshore insurance business.

Under new regulations, for the first time in the country, foreign insurers are permitted to open IFSC Insurance Office (IIO) at GIFT IFSC. As GIFT IFSC has been notified as foreign territory by Govt. of India the foreign direct insurers (Life, Non-Life & General) & foreign re-insurers are permitted to open office to undertake dollar denominated business from within the IFSC in GIFT SEZ, all other Special Economic Zones in India, from foreign countries (this covers foreign to foreign, India to Foreign & Foreign to India). It would also be allowed to undertake Domestic Insurance & Reinsurance business in line with the provisions of IRDA regulations.

Commenting on the development, Mr. Ajay Pandey, MD & Group CEO, GIFT City said “The vision of Prime Minister of making India a Hub for International Financial Services can be achieved with business friendly regulations and competitive tax regime. We are thankful to Department of Financial Services & IRDAI for issuing business regulations for IFSC which would go long way in making GIFT IFSC a hub for Offshore Insurance business. GIFT IFSC already hosts 3 major insurance players, GIC Re, New India & ECGC, and five insurance broking entities. With the business guidelines in place, we are now hopeful that foreign & domestic insurance companies would participate in making GIFT IFSC a hub for International Insurance business.”

Government of India has provided competitive tax regime for the IFSC units and thereby units are provided 10 year tax holiday (of which the first 5 years is a complete tax holiday and for next 5 years there’s a tax reduction of 50%),which is applicable for all insurers operating within GIFT IFSC. For export of services, Insurance Companies operating from IFSC are exempted from GST.

GIFT IFSC, being a foreign territory mainly conducts offshore business. Thus, the restriction on shareholding does not apply in IFSC and thereby a foreign direct insurer has option to set up operations directly without any local partner.

The move would also help Indian Insurers to set up their offshore office in GIFT SEZ IFSC to undertake dollar business which otherwise was restricted in India. This would become a big enabler for Indian direct and re-insurance players as it provides them a foreign branch in close proximity which would be operationally cost effective.

GIFT city, a Government of Gujarat Project in partnership with IL&FS is developing India’s First Global Financial Hub. GIFT is India’s first multi-service SEZ with IFSC status which is catering to India’s large financial services market by offering global firms, world-class infrastructure and facilities. It is attracting the top talent in the country by providing the finest quality of life. It is estimated that GIFT would provide 5,00,000 direct and an equal number of indirect jobs which would require 62 million square feet of office and residential space. Like other leading global financial centres, GIFT will target a 6-8% share of the financial services potential in India.

DeshGujarat