As the Indian Finance Minister, Nirmala Sitharaman and UK Chancellor, Rishi Sunak hold the 11th UK-India Economic and Financial Dialogue (EFD), the India-UK Financial Partnership (IUKFP) has released a new report focused on the development of Gujarat International Finance Tec-City (GIFT City) into a global services hub. This will be achieved by strengthening its ties with the UK and sharing experiences as it becomes a leading international financial centre. The purpose of the IUKFP is to increase collaboration between the financial sectors of India and the UK.
The trade and investment relationship between the UK and India has been of growing importance over the past few years, with UK services exports to India amounting to almost £3bn (~Rs 30,200 crore*) in 2019, with financial services making up £370m (~Rs 3,700 crore*) of that total. The India-UK Financial Partnership (IUKFP) is actively looking to deepen this relationship further, helping to create new jobs, exports and investment in both countries.
In its latest report, ‘Developing GIFT City into a global services hub’, the IUKFP sets out detailed policy recommendations for creating and sustaining the financial ecosystem at GIFT City. It makes the case for a regulatory approach underpinned by a principles-based regulatory framework and vibrant infrastructure that supports and drives broader economic activity, while also addressing specific areas of potential reform, including for insurance, exchanges and clearing.
The GIFT City initiative aims to grow India’s financial links with the rest of the world by developing a business and regulatory environment that holds its own against other leading financial centres around the globe.
The paper proposes greater alignment with the UK and was developed based on input from industry leaders across the financial and related professional services ecosystems in both India and the UK. By working with GIFT City, UK-based firms can strengthen their international networks and deepen trade and investment links between India and the UK.
The report will be presented by the Co-Chairs of the IUKFP to the Chancellor and the Finance Minister at the EFD. The IUKFP is led on the UK side by David Craig, Senior Advisor to the London Stock Exchange Group and Co-Chair of the Taskforce on Nature-related Financial Disclosures (TNFD), and on the India side by Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank.
David Craig, UK Chair of the India-UK Financial Partnership said, “The success of GIFT City will depend on delivering strong governance, competitive positioning and the scalability opportunities successful firms demand. These are all areas in which the UK has traditionally excelled, and we are keen to work with our Indian partners to replicate that. By developing GIFT City into a truly global financial services hub, and promoting greater links with the UK financial and related professional services ecosystem, we can secure real economic benefits for both our countries.”
Uday Kotak, India Chair of the India-UK Financial Partnership said, “The UK and India have two of the world’s most exciting and innovative services industries providing a solid foundation for economic cooperation and development. Many companies already have significant operations in both the UK and
India, and we see great opportunity in further deepening these links. To do so we need a compatible approach to regulation, a stronger enabling environment for both Indian and UK firms, and smoother processes for transferring and accessing global talent. These are all areas which the IUKFP is focused on progressing in the years ahead.”
The report builds on the broader work of the IUKFP, which seeks to deliver practical recommendations for deepening linkages between the financial sectors in India and the UK, increasing trade and investment flows, and supporting policy reform. Other IUKFP workstreams cover FinTech, data and cross-border trade and investment.
Members of the IUKFP include around 30 business leaders, on each side, as well as senior officials from the Ministry of Finance, regulators from India, and HM Treasury, the Bank of England and the Financial Conduct Authority from the UK.
India is currently the world’s sixth-largest economy but ranks only 61st as an export destination for UK financial services exports. UK services exports to India amounted to almost £3bn in 2019, with financial services making up £370m of that total. This compares to UK exports to Japan, which reached over £4.1bn in the same year for financial services alone. With a population of 1.3bn – more than a tenth of whom have English as a second language – and projections of rapid economic growth over the coming decades, India is a vast potential market with which the UK can partner to deliver shared prosperity.
*£1 = INR 100.69