Shiv Sena, Congress say Centre ‘snatched’ projects from Mumbai as IFSC fails to take off – Hindustan Times

Mumbai: While the Gujarat International Finance Tech (GIFT) City got an impetus in the Union Budget, the proposed International Financial Services Centre (IFSC) in Mumbai remains a non-starter as the Center has not yet given its nod for finance Special Economic Zone (SEZ). The ruling coalition in Maharashtra has alleged that the IFSC plan was put on the backburner by the Centre to give a lead to GIFT City. The Bharatiya Janata Party (BJP) has, however, questioned why the Maharashtra Vikas Aghadi (MVA) did not revive the plan.

In the Union Budget 2022-23, the Centre made four announcements for GIFT City — a dedicated international arbitration centre for cross-border dispute resolution; foreign universities; tax exemption for ship-leasing and financing; and tax exemptions for offshore fund management and offshore banking at IFSC.

Shiv Sena and Congress have dubbed the announcements as a move to “snatch” key projects away from Mumbai and an attempt to pass on benefits to Gujarat. Sena is likely to rake up the issue against BJP ahead of the Brihanmumbai Municipal Corporation (BMC) elections.

Sena leader and chief spokesperson Sanjay Raut said, “These are attempts to pull down Mumbai and snatch away the important international financial projects and schemes from here. We are not hurt by other states’ progress, but it is not right to insult Mumbai.”

Congress general secretary Sachin Sawant also targeted Maharashtra’s BJP leaders saying they have done “irreparable” damage to the state by remaining “silent” on the Centre’s move to build IFSC in Gujarat. “Had the IFSC come up in Mumbai, it would have got these benefits,” he said.

On Thursday, an editorial in Sena mouthpiece Saamana said “blocking” Mumbai’s progress to promote other states is a “national crime”. It further said that industries and institutions are being driven away from Mumbai to Gujarat and remarked that the only thing remaining is to make Mumbai a union territory. “Mumbai is an international finance hub and is the country’s industrial centre. But making Ahmedabad-Gandhinagar a financial hub instead of Mumbai is a national crime,” it said.

In an attack on the Centre over no announcements for Mumbai and Maharashtra, the editorial said that Mumbai contributes ₹2.25 lakh crore annually as taxes, and the country is riding on Mumbai’s back, but things are “snatched away” from Mumbai and other cities are being “turned into gold”.

A 50.31 hectare-land has already been earmarked to meet the requirements of a finance Special Economic Zone (SEZ) as per the parameters laid down by the Centre. A finance SEZ tag is essential for BKC to get the tax sops and other benefits accorded to an IFSC.

Despite setting up a task force under then Minister of State for Finance Jayant Sinha and a push from the erstwhile BJP-led Maharashtra government to make the Mumbai IFSC project supplementary to complement the GIFT City, the project has not moved forward since.

Countering the ruling coalition, Poonam Mahajan, Mumbai MP and former member of the task force on IFSC, said that the MVA government merely pointed fingers at the Union but did not take things forward to set up IFSC. Mahajan, MP from Mumbai North-Central, which includes BKC, said that the GIFT City plan was mooted in the mid-2000s.

“When we (BJP) came to power in 2014, we started work on IFSC in Mumbai. But nothing has moved ahead since 2019. They are merely blaming the Centre, why couldn’t the Maharashtra government set up a task force to take ahead the work on it?” she asked.

Mahajan added that the state government needs to get a financial SEZ tag on the earmarked plot in BKC through the Centre, adding that a hub and spoke model can be used to set up IFSC which would complement the GIFT City. Despite attempts, the former chief minister and BJP leader of opposition in Maharashtra Devendra Fadnavis could not be reached for comment.

Maharashtra Industries Minister Subhash Desai said that the state government will soon set up an international finance centre in Mumbai as it is best suited to and most investors would prefer Mumbai over Gandhinagar. Law firms and arbitration experts said that the Maharashtra government could set up an international finance centre, but the Centre’s assistance would benefit it more with tax exemptions making it more attractive for the international business community.

With the Centre’s announcement on Tuesday to have a dedicated international arbitration centre at GIFT City, it is seen that it could reduce the importance of arbitration centres in Mumbai. However, Madhukeshwar Desai, chief executive officer of Mumbai Centre for International Arbitration (MCIA), the country’s first such centre, said that it is unlikely to diminish the importance of Mumbai centre as it is the financial capital.

“Before we (MCIA) set up in 2016, there were around 20 other arbitration centres. After we set up, two other centres came up in Delhi and one is coming up in Hyderabad. I do not believe that it (arbitration centre at GIFT City) would be detrimental to the Mumbai centre. Because there are so many matters; If we have to reach a $5 trillion economy, the number of disputes will also increase,” said Desai, who is also the vice president of the BJP youth wing.

Desai, who is former prime minister Morarji Desai’s great-grandson, said that India accounts for over 20 percent of the arbitration matters in the world and that more centres of arbitrations would help the country. “Most arbitration matters go to Singapore, London or Paris. As per the report of the arbitral centres, more than 20 percent of the matters emanate from India. If this goes to other countries, it is a huge loss to the nation.”

A senior arbiter said that the importance of Mumbai will not diminish and that the GIFT City has not picked up pace as envisaged, hence the Centre is giving more incentives to attract investors. “If you see all IFSC and arbitration centres are centres are located in the financial capital of countries. Mumbai has everything that is required to have IFSC. Companies will prefer Mumbai over Gujarat even if there are tax exemptions,” he said, requesting anonymity.