Singapore Nifty is all set to return to India after nearly two decades. Come April and the National Stock Exchange (NSE) and Singapore Stock Exchange (SGX) will finally launch their much awaited GIFT Connect plan at the Gandhinagar based tax friendly offshore market place, sources said. In December, BusinessLine had reported that SGX was churning higher volumes in Nifty trading than NSE, which simply meant that foreign portfolio investors (FPIs) had shifted their positions to Singapore. The SGX churned over ₹26,000 crore worth of Nifty futures volume on an average daily in 2021 compared to NSE’s over ₹14,600. Significantly, the plan now is envisaged to tell the world that India was bringing back its stock market volumes that were lost to Singapore, which is known to provide generous tax soaps and a blanket of secrecy to fund managers.

GIFT connect

GIFT Connect has already suffered a long delay of over three years since the government directed market regulator SEBI to take stern measures to stop the export of Indian stock markets to overseas tax havens. NSE was even asked to delist Nifty from the SGX platform but the two bourses first got engaged in a legal battle over it and then worked out a middle path. Sill, the fine print of the structure being followed by the NSE and SGX for GIFT Nifty is not out in the public domain. Sources say, both exchanges are forming a special purpose vehicle (SPV) that will be based in GIFT City. The SGX SPV will trade on NSE’s GIFT platform and the fund managers based out of Singapore will remain clients of the SPV. Hence, the fund managers will not move to India or fall under jurisdiction of tax authorities here even for the purpose of identifying ultimate beneficiaries. Instead, they would be governed by Singapore laws, the sources say. All this, even when the government has given a generous 10 year tax holiday for businesses in GIFT, which does not attract any long term or short term capital gains tax, wealth tax or even transaction tax. Before a dedicated GIFT City regulator came into play, SEBI had approved a segregated nominee account structure for FPIs for trading in GIFT City through a broker or service provider with confidentiality. Knowledge of the ultimate beneficiary of clients of such brokers is unknown to the Indian regulators or taxmen here, unless sought. The NSE-SGX SPV will act as a broker for foreign clients. Also, a separate category called ‘eligible foreign investors’ has been ‘carved out’ and they are not required to hold a permanent account number (PAN) in India. Even such investors can trade on the GIFT City platform.

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