India’s GIFT to the World

Will India house the next big financial hub of the world? Prime Minister Modi sure hopes so. Back when he was Chief Minister of Gujurat, Mr. Modi had set a vision of creating a new city that would be like Singapore — great infrastructure, tax benefits, welcoming to expats, and open for the growth of new companies. This city is called the Gujarat International Finance Tec-City, GIFT as it’s commonly known.

The city is under-construction but when finished, it will solve some of the problems financial and tech companies in Bangalore, Mumbai and other Asian cities face: very expensive or very inadequate infrastructure. These companies simply can’t grow where they currently are. However, upon completion, GIFT will have stock exchanges, software parks, special hotels, entertainment and more. Probably most importantly, it will have a special economic zone where businesses would be free from some of the central bank rules and capital markets regulations that companies have often complained about. Think of it like building a modern day New York or London from scratch.

Like all ambitious projects, the challenge GIFT faces right now is in the execution. Construction is moving slowly and the rush of companies wanting in has been stalled. Of the two major office towers built, one is 50% full and the other empty. In addition, the building of phase 1, which covers only a fifth of the proposed 62 million square feet, is still four to five years away. Finally there is a the social criticism. India has some of the biggest disparity of the haves and have-nots in the world. The money being invested in GIFT could be used to improve the infrastructure of the poor living in India’s current cities.

That last challenge is often the biggest. On one side it’s great to have a global showcase that all the citizens can be proud about. Think about how Londoners and New Yorkers feel about themselves. And even if they don’t live in those cities, Americans and British love to rave about their monumental cities. But on the other side, at what cost is it if the citizens it’s supposed to give inspiration to in the future are not any better in their present?

I think GIFT is just one part of a long-term plan to improve the living standards of everyone in India. Just like better banking, more accessible internet, and cheaper eduction.

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