The rise of Gandhinagar as a ‘Financial Hub’

Apr 2, 2024 India Shipping News

GANDHINAGAR : Gujarat’s capital Gandhinagar has been a bastion of Bharatiya Janata Party (BJP) since 1989, with the likes of party co-founder Shri Lal Krishna Advani, former Prime Minister Shri Atal Bihari Vajpayee and now current Home Minister Shri Amit Shah representing the constituency in Parliament.

Economic profile 

Once a sleepy cousin to bustling neighbor Ahmedabad, Gandhinagar is now on the global financial map as an emerging hub for international transactions.

In the last 10 years, Gandhinagar’s contribution to Gujarat’s growth has increased manifold. Apart from the city’s strategic location, what it has going for it is improved connectivity and other infrastructure. To begin with,  travel time between the twin cities will be slashed when the Ahmedabad-Gandhinagar Metro launched in 2918 is completed this year. But what has undoubtedly put Gandhinagar on the financial map is the decision to site  the Gujarat International Finance Tec-City, or GIFT City as  it is called, there. India’s first operational smart city was launched in 2015 but has really taken off in the last two years or so, offering a slew of incentives that has encouraged businesses to set up shop. The government has exempted units of investment trusts and exchange-traded funds issued by entities based in GIFT City or traded on exchanges there from capital gains tax. Also, interest paid to non-residents on investments in the International Financial Services Centre at GIFT City is not taxable.

“With the boom in the services sector across the region encircling Gandhinagar, and more specifically information technology, it is safe to assume that Gandhinagar will bolster Gujarat’s growth story. And especially, with the combined forces of Ahmedabad and Gandhinagar, it is going to be an easily achievable target with increasing focus on holistic development inclusive of manufacturing, trade and even entertainment,” Moiz Rafique, Managing Partner of Gujarat-based law firm Privy Legal Service, told.

Industrial base

The constituency boasts a diverse industrial base, encompassing sectors such as manufacturing, pharmaceuticals, chemicals, textiles and electronics. Gandhinagar also has the presence of many IT companies including Tata Consultancy Services, Infosys, Cybage and Wipro.

Infrastructure development

⁠In the last decade, Gandhinagar and its environs have emerged as a strong educational and talent hub with establishments like the National Institute of Design, Pandit Deendayal Petroleum University, Gujarat National Law University, Forensic University, Dhirubhai Ambani Institute of Information and Communication Technology, Indian Institute of Technology, etc. Australia’s Deakin University will open its first branch campus in the city later this year. Abu Dhabi Investment Authority, the emirate’s sovereign fund, Japan’s Mizuho Bank, bullion trading desk American StoneX, and the UAE-based Transworld Group have committed to set up bases in Gandhinagar in 2024. 

The highlight of Gandhinagar’s infrastructure story is Gandhinagar Smart City Development Limited, which boasts of storm water control and drainage using grass and other vegetation, construction of smart roads using tech for traffic control, and an integrated command and control that is the nerve centre of it all as its main projects. The riverfront extension announced in 2024 will also be instrumental in connecting the twin cities of Ahmedabad and Gandhinagar.

“These projects… collectively drive Gandhinagar’s holistic development, making it a more liveable, sustainable, and technologically advanced city,” said Kunal Sharma, partner at law firm Singhania & Co, which opened its Gujarat offices in 2019.

GIFT City

The greenfield financial hub was proposed in 2007 by Shri Narendra Modi as the then Chief Minister of Gujarat as an alternative cities such as Singapore and Dubai.

GIFT City bridges Gujarat’s financial capital Ahmedabad and political capital Gandhinagar, and Budget 2023-24 delegated powers under the SEZ Act to International Financial Services Centres Authority (IFSCA) to avoid dual regulation. Spread over 880 acres, Gandhinagar, it has attracted various companies that have transformed it into a prime investment destination. GIFT City has become a pivotal center for financial and technological services in India with its strategic positioning, investor-friendly policies and robust infrastructure luring companies including global players like Google, Bank of America, Oracle and Morgan Stanley, setting up operations in the International Financial Services Centre within GIFT City. The bullion exchange at GIFT City was set up in 2020.

Investments by corporates

Eros Investments in a statement on January 4, 2024, said that it will be building India’s first artificial intelligence (AI) park at GIFT City with an investment of Rs 16,000 crore by mid-2025.

In January 2024, Prime Minister Shri Narendra Modi had inaugurated the 10th edition of Vibrant Summit in which memoranda of understanding for 41,299 projects were signed attracting investments worth Rs 26.33 lakh crore in Gujarat.

Real estate prices

Over the past decade, the real estate landscape in Gandhinagar has been significantly influenced by various infrastructure projects, fueling substantial growth and demand in the sector, stakeholders said.

Gujarat experienced an impressive 84 percent surge in real estate transactions during 2022-23, achieving a record turnover of Rs 8.45 lakh crore and indicating a robust recovery and expansion in the  market. “The growing area of GIFT City is majorly contributing to the price rise around Gandhinagar which was once a serene and calm non-real estate deal zone,” said Sharma of Singhania & Co.

Prices are expected to rise further with the government announcing the extension of the riverfront project from Ahmedabad to Gandhinagar.

“Real estate has seen a huge fillip in Gandhinagar. Realty has given over 100 percent returns in the last decade,” said Nagendra Rathore, director of Gujarat-based real estate firm UpValue Infra.

Liquor exemption

One of the big handicaps holding the city back was restriction on alcohol consumption. On December 22, 2023, the state announced that workers in and visitors to GIFT City would be allowed to raise a glass. While patrons can enjoy alcoholic beverages on the premises of hotels, clubs and restaurants in GIFT City, the sale of liquor bottles by these establishments will be prohibited.