This city falls under the special economic zone and is created to encourage exports and foreign investments, especially from multinational corporations.
The Indian government has introduced tax incentives, such as a zero withholding tax, which in principle is applied to the offshore-foreign currency-denominated borrowing from outside India. As regulations prohibit extending foreign currency-denominated loans in India, the offshore-foreign currency-denominated borrowing from outside India has been well utilised.
“GIFT City presents an opportunity for the bank to manage offshore business linked to India from within the country, enabling us to cater to the diverse and growing needs of our clients,” SMBC said in a statement.
GIFT City, where the banking asset size crossed $52 billion in January, is India’s first smart city including a financial offshore special economic zone in Gujarat. The city now has 11 international banks and 16 domestic banks.