Mumbai's IFSC dream dead

It’s official -- Mumbai’s long-held dream of becoming an International Financial Services Centre is dead and buried. The central government in its gazette notification dated April 27 has declared that Gandhinagar in Gujarat will be the headquarters for the IFSC Authority.

Gandhinagar is where Prime Minister Narendra Modi’s dream project – the Gujarat International Finance-Tech City – is taking shape.

While it has been clear for a few years that Modi wanted Gandhinagar to have the coveted title, that Mumbai stood no chance became apparent when he forced his own government in Maharashtra to give up the land set aside for IFSC in BKC for a Bullet Train terminal.

The Mumbai IFSC project, though, was a non-starter since its birth in 2006. When the then prime minister Manmohan Singh announced it, the idea was to let Mumbai take advantage of its unique geographical position. Time-zone wise, the city is midway between two major IFSCs -- Singapore and London.

However, the recommendations of a committee formed under well-known investment banker Percy Mistry to recommend the path ahead were never followed. Percy committee had sought a major upgrade of city’s infrastructure, but what Mumbai got was only the Ghatkopar-Andheri Metro line. The committee had also asked for promulgation of new, more liberal laws in banking, securities, commodity and currency trading. This too could not be achieved.

According to a senior banker, an IFSC in Mumbai would have helped create at least 100,000 new jobs in the financial sector directly and another 100,000 in ancillary services.

A CEO of a major brokerage house, who did not wish to be identified, said: “After Modi became the prime minister in May 2014, Mumbai’s dream of becoming an IFSC was dead. The January 27 notification has only confirmed the death.”

In December 2017, while answering a question in the Lok Sabha, the then finance minister Arun Jaitley had made it clear that there can be only one IFSC in the country and that it will be the GIFT city.

Political analyst Hemant Desai said Modi’s love for his home state defeated Mumbai’s natural claim to the status of an IFSC. “Modi, even after becoming the prime minister, has not forgotten that he is a Gujarati first,” he said.

Another banker requesting anonymity, however, said that just the title does not make an IFSC. “As long as Mumbai has the RBI, SEBI, BSE, NSE and several national and international financial institutions are headquartered here, the city cannot be robbed of its status as the financial capital of country,” he said.

No comments: