Expert Committee Submits Report on Onshoring Indian Innovation to GIFT IFSC

Key Takeaways:

1. The report focuses on understanding the reasons for the shifting of Indian startups outside India and suggests measures to avoid externalization of startups in the future.

2. It aims to persuade startups that are presently externalized to redomicile back to India.

3. The report provides recommendations critical to the development of GIFT IFSC as a global Fintech Hub.

4. It identifies challenges and measures for the development of the International Innovation Hub at GIFT IFSC.

5. The report offers a comprehensive comparison of India’s approach to holding company setups with other leading jurisdictions and highlights the potential of reverse flipping to drive India’s economic development.

Synopsis:

The International Financial Services Centres Authority (IFSCA) is a statutory authority established by the Government of India. It is responsible for regulating and developing the financial services market in the International Financial Services Centre (IFSC) in India. The IFSCA has been actively involved in promoting the on shoring of Indian innovation to GIFT IFSC, with the aim of creating a conducive environment for startups and fostering economic growth.

The Committee of Experts on ‘On shoring the Indian Innovation to GIFT IFSC’ was constituted by the IFSCA and submitted its report to the Chairperson of IFSCA on August 14, 2023. The committee, chaired by Shri G. Padmanabhan, Former Executive Director of RBI, comprised representatives from leading Venture Capital funds, Startups, Fintechs, Law firms, Tax firms, and other domain experts. The main focus areas of the committee were directed towards understanding the reasons for the shifting of Indian startups outside India and providing suggestions to avoid externalization of startups in the future, as well as persuading startups that are presently externalized to redomicile back to India.

The committee’s report offers a comprehensive comparison of India’s approach to holding company setups with other leading jurisdictions like Singapore, the Netherlands, and Delaware, known for successfully implementing such setups. It highlights the manifold advantages and addresses potential challenges associated with holding company regimes, unveiling the immense potential of reverse flipping to drive India’s economic development to great heights.

The report has provided various recommendations critical to the development of GIFT IFSC as a global Fintech Hub, besides suggesting measures to encourage new Fintechs to have a global outlook to set up their commercial presence in GIFT IFSC. It has also identified challenges and recommended measures for the development of the International Innovation Hub at GIFT IFSC. The report has suggested various measures and action points to be undertaken by various stakeholders, including ministries, regulatory bodies, and others, in implementing the idea of on shoring the Indian innovation to GIFT IFSC.

The insights presented in the report are expected to drive dialogue in the ministry and contribute to achieving the Hon’ble Prime Minister’s grand vision of making India a 5 trillion-dollar economy and a global powerhouse. The report of the committee can be accessed through the weblink: IFSCA Report Publication.

The report emphasizes the importance of the startup industry in fostering India’s economic growth and financial inclusion. It acknowledges the significant role played by the Indian startup ecosystem in driving innovation, creating wealth, and contributing to the country’s economic growth. The report also highlights the challenges faced by Indian startups, such as the trend of externalization or flipping to overseas jurisdictions, and provides recommendations to reverse this trend and make GIFT IFSC the first destination of choice for Indian startups.

The committee’s recommendations cover a wide range of issues, including company law and regulatory aspects, tax-related issues and proposals, listing of startups on IFSC exchanges, peripheral issues, other regulatory issues, automation challenges, infrastructure issues, intellectual property related issues, and perception-related issues. The recommendations aim to create a facilitating environment for startups and holding companies in GIFT IFSC, addressing various regulatory, tax, and operational challenges.

Overall, the report of the expert committee on ‘On shoring the Indian Innovation to GIFT IFSC’ provides a comprehensive analysis of the startup ecosystem in India, identifies key challenges, and offers strategic recommendations to promote the on shoring of Indian innovation to GIFT IFSC, aligning with the broader vision of making India a global economic powerhouse.

FAQ

Q1: What is the main focus of the committee’s report?

A1: The main focus of the committee’s report is to understand the reasons for the shifting of Indian startups outside India and to suggest measures to avoid externalization of startups in the future.

Q2: What are the key recommendations provided in the report?

A2: The report provides critical recommendations for the development of GIFT IFSC as a global Fintech Hub, identifies challenges and measures for the development of the International Innovation Hub at GIFT IFSC, and offers a comprehensive comparison of India’s approach to holding company setups with other leading jurisdictions.

Q3: How does the report aim to contribute to India’s economic development?

A3: The report aims to highlight the potential of reverse flipping to drive India’s economic development and to persuade startups that are presently externalized to redomicile back to India.