A new regulatory authority for GIFT (Gujarat International Finance-Teh) City may come up soon in Gandhinagar, sources told BusinessLine . So far, SEBI and RBI have been taking care of regulations but the government on April 27 announced setting up of office at GIFT city, which sources say is a pre-courser to bringing in a new regulator.

Currency, bullion and equity index futures are traded by the Bombay Stock Exchange and the National Stock Exchange in GIFT City.

GIFT, a brain-child of Prime Minister Narendra Modi, was supposed to bring back trading volumes in financial markets that India lost to off-shore destinations or tax havens; but that still remains a distant dream, experts say. The government feels that a full time regulator dedicated to GIFT city could streamline rules to attract foreign players here. Domestic traders cannot play on GIFT exchange. Trading in assets on GIFT platform are dollar denominated, which means partial capital account convertibility.

A slew of tax incentives have been announced for GIFT City. It included zero stamp duty, securities transaction tax and even no short or long term capital gains tax. But trading volumes are so far only supported by market making schemes.

India’s Nifty generates a high churn in Singapore on the SGX and large foreign portfolio investors are known to take position there. Similarly, Singapore, Dubai and the US are known markets for trading rupee.

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