Sunday, November 19, 2017

Project Focus

GUJARAT INTERNATIONAL FINANCE TEC-CITY

Everything's smart about GIFT City!

 

Rising from seemingly barren earth, eight kilometres from the Gujarat capital Gandhinagar, is nothing short of an infrastructure miracle: smartly manicured patches of green that would do a golf course proud, macadam in place of mud, well developed roads, underground tunnels being constructed, cooling towers, and finally the architectural tour de force – twin steel and glass towers, the tallest in the state, one of which has already begun to house the early bird version of the Gujarat International Finance Tec-City(GIFT), India’s answer to the financial centres of the world.

These developments and more owe as much to the foresight and initiative of one man, Narendra Modi, the former Chief Minister of Gujarat and the current Prime Minister of India, as to the Gujarati spirit of financial enterprise.

GIFT City aspires to cater to India’s large financial services potential by offering global firms world-class infrastructure and facilities. It aims to attract the top talent in the country by providing the finest quality of life with integrated townships, IFSC and a multi specialty special economic zone.

 

RAMAKANT JHA, MANAGING DIRECTOR, GUJARAT INTERNATIONAL FINANCE TEC-CITY (GIFT) offered SHRIKANT RAO  an understanding of the exemplary project as a model of smart financial city development 

 

Gujarat in many ways has led the country for some time whether in terms of business or development initiatives. GIFT is, in that sense, also a first for the country. Give us an understanding of the genesis of the project and briefly take us through the progress it has made till now?

This project derives inspiration from Narendra Modi, the former Chief Minister of Gujarat and the current Prime Minister of India. He foresaw the tremendous need for an international finance centre in India when he visited Hong Kong and other places. He thought it strange then that Singapore which does not have its own domestic market was doing so much by way of international finance services, whereas India, with so much domestic demand itself, didn’t offer these services. It was also found that the country was at a tremendous disadvantage in terms of business lost because we could not cater to our own requirements and transactions had to be routed through Singapore, Dubai, Hong Kong or London with the end result that business ended up going abroad. With that in mind, it was decided to develop a global financial centre with help of other international finance centres. That is how the idea of GIFT originated and planning started on the project.

GIFT is a global financial hub, the full form being Gujarat International Finance Tec-City. We are developing it as a global financial hub in two parts – domestic and as an international financial centre. A domestic financial centre is commonly known to people; but an international financial centre, which is being developed for the first time in this country, has great potential along with domestic. First of all, from an employment point of view, we are talking of creating one million jobs – five lakh direct and five lakh indirect. This is unique because no other project is generating employment of such scale. That in itself is a big accomplishment and will bring a lot to the economy, both as direct investment in GIFT and also in its effect on the surrounding areas. We have studied about 15 financial centres around the world and have found that their contribution is of the range of 5-15 per cent of their respective country’s GDP. In terms of business, GIFT will add about 10 per cent of GDP from the volume of business that can be generated. Our aim is that we should be at least about 15 per cent when it is fully developed. We expect annual revenue generation for the state to be of the order of Rs.4,000 crore and to the centre about Rs.7,000 crore, a total of around Rs.11,000 crore. That is additional revenue besides the GDP of the country. The volume of business is so high. The spinoff effect is tremendous when you consider the socio-economic impact on the employees and their families, and also in terms of generating requirement and demand for infrastructure facilities, housing – roughly 8 lakh houses will be needed for those working in GIFT City – white goods, vehicles etc. The end result is that the whole economy changes, the whole perspective of a city changes. We have estimated around $120 billion being generated from here by way of transactions by 2020 from here if things are properly done.

 

There has been talk for far too long of Mumbai becoming a global financial hub but we see Gandhinagar taking the lead. Would it be fair to characterise Mumbai as a non-starter? 

You have to see things in perspective. There, in Mumbai, space is not available and it is not conducive to build infrastructure, also the cost of operation can be very high. Yes, from an international finance centre point of view, Mumbai remains a non-starter. But it is good that it has been done here. Entrepreneurship comes instinctively to the people of Gujarat. Fortunately, if you see around the world in India and elsewhere, a large number of people in the financial services are Gujaratis. For them, finance is a very natural thing but a major question that emerged was if there was enough talent available. You can develop a city, you can develop infrastructure; but people with the right talent need to be available to set up such services if you want to set up an international financial service centre. That issue too was sorted out, when ten years ago, the Gujarat government started an educational reform process, with the result that in the last five years, there has been a dramatic increase in student output from engineering colleges and management institutes, both in terms of quality and quantity. There is a now a huge talent pool available in Gujarat to cater to the project we are doing.

 

Was there a specific plan of action leading to the setting up of GIFT?  

We undertook the project systematically. A study was carried out on what must be the prerequisites for developing a global financial hub. It was found that world-class infrastructure, conducive regulations, availability of a talent pool, a good institutional arrangement for developing and governing the city besides political stability were the main requirements. Talent was a big question in the beginning but in the last ten years systematically we have addressed the issue which is no more a bottleneck, which is a positive thing. These graduates were looking at jobs elsewhere earlier because the opportunity did not exist for them here but now it is. Now things have been put on fast track, we should start developing the financial services.

Traditionally, Gujarat has been into trading, it later graduated to manufacturing – the state has done very well in the pharmaceuticals and automobiles sector. Now we will see the next level of growth through financial services and IT. The only thing remaining is that conducive rules will be required to be framed which will allow us as a financial services destination to compete with other centres from around the world. The draft rules have been prepared and the matter is being fast tracked by the Government of India and we expect them to be finalised in the next few months. What we are doing at our end is that we are developing a world-class financial centre which is high up on the global attractiveness index in terms of infrastructure and facilities, quality of life, social infrastructure, hospitality and entertainment. What we have is absolutely the best.

 

Does GIFT City derive inspiration from any known financial services centre model elsewhere in the world? How different is GIFT from other financial centres? 

No, there is no one model. Most of these centres around the world have historically evolved over time.  Other cities’ financial centres are historical so they have assorted type of development. But there is no one centre that is developed as brand new and done from scratch in recent times. The recent example, one can take, is of Singapore or Dubai, but those have not been done on a large scale like GIFT. I would say every financial service centre gave us some inputs and we were happy to assimilate those inputs.

 

Tell us about the architects and designers of this project?

We have had East China Architectural Design Institute (ECADI) for the master planning. We have done further infrastructure development, planning and detailing along with many other international consultants.

 

What are the elements of GIFT City?

In GIFT City, we will have 120 buildings – all of them towers – with a total built up area of 62 to 90 million sq ft. Of this 67 per cent will be commercial, 22 per cent will be residential and 11 per cent will for social purposes such as school, hospitals and malls. Sometime in the future the Diamond Tower, which currently exists as a concept will come up in the area and will be used to house a diamond trade centre. The government has allotted 886 acres of land in which we are developing GIFT City, but the adjoining area will be developed for residential purpose. Incidentally, 60 per cent of the area will be lush green. We are investing heavily in solar; the city will have zero discharge of water, rain harvesting facilities so that no water is wasted.

With a lot of international visitors, who expect superior accommodation, streaming into the city we will also have about 5,000 hotel rooms. GIFT City will be open for 24 hours with good entertainment centres. The international finance centre will be live 24x7 to cater to business from Tokyo to New York.

In terms of infrastructure, you will find high quality, state-of-the-art roads, water supply, sewerage. In addition, we are developing district cooling systems which means that each building need not have its own air conditioning. There is a zonal district from where chilled water is supplied to each building so that the cost of cooling of each building gets reduced. Also the energy consumption is reduced by 30 per cent. Then we have an automated waste collection system which means every building will dispose the garbage, which will be segregated at source – organic and inorganic – and that is sucked by underground pipe to the disposal location. No human intervention will be required for that. Also as Intelligent Communication Services (ICT) is the backbone of financial services, we are developing ICT services from the beginning and the city will have the best of it.

Tata Communications is setting up the biggest data centre in the country here. We are also building underground utility tunnels of the size of 7 m x 7m throughout the city which will carry pipelines intended for cable or electricity except sewer line and gas, and with room for a maintenance vehicle to go there to monitor, detect and to repair faults if any. This is the first time in the country that a utility tunnel has been deployed throughout a city. We have also been given power distribution license by the government so that we can manage the city in an efficient manner. Our power requirement is 750 MW. We provide quality power supply without any interruption and backup facility. We will have our own generation plant of about 150 MW so in case of a failure emergency power supply can be maintained. The international finance services centre is also very well catered to in terms of surveillance and security systems. Every person who enters either of the five gates or entry points will be under total surveillance so that security risks are minimised without affecting the privacy of the people. All this, including the utilities, will be managed by central command and control.

 

Who are the players participating in the project in the construction and infrastructure segments that you just mentioned and tell us about the business opportunities available?

We have a lot of global players associated with various areas of infrastructure. For instance district cooling is done by ETA, which is a company from Dubai with a lot of experience in setting up such district cooling centres. The automated waste collection is by Envac, a Swedish company. The power substation is being done by Bluestar, while Voltas is doing the water and sewage treatment plant. In ICT we have a consortium of Tata Communication, Korean Telecom, CISCO – they are the main players and our strategic partners. For security, we have not yet tied up with anybody. But we are floating tenders for that. The buildings will be done by leading developers, both Indian and international. Two buildings have been developed by IL&FS. The contractor for the first building is L&T while for the second, it is ANC from Dubai. We wanted to set international benchmarks and therefore wanted players with a large profile. We are also having an agreement with Singapore government to develop the financial operations hub here which will be connected to Singapore and with other centres so that, ultimately, the GIFT City can work as part of the global network. We are also developing systems in collaboration with other centres and are exploring access tie-ups with stock exchanges in Tokyo or London. I would say it is a win-win situation for us.

 

Can you tell us about the space occupiers?

The World Trade Center is coming up here in an area of 1 million sq ft. We have allotted land for a school to Narsee Monjee of Mumbai which will be operational next year. Then we have Sterling Hospitals building a 200 bed facility here. We have also given land for development of clubs and hotels. We have the West India Hospitality Group doing a project here along with Sheraton. These allotments have started but our priority is to have infrastructure in place. And whatever you see here has been developed very much on fast track. The land was officially transferred to us on June 2011 after all clearances were obtained. 

 

There is also emphasis on recreation and entertainment?

Yes, a serious business hub need not be a drab area. So we are developing an artificial lake of 1.2 km length which will work as a balancing reservoir. We are taking water from the Narmada Canal. Water to the extent of 15 day’s supply will be stored here and from here we will pump it into the water treatment plant. So in the end we have a nice water-front development with fountains and water sports activities built around a place called Samruddhi Sarovar. The area will also house entertainment and food courts.

 

Who are the financial players setting up base here?

Most of the public sector banks like Syndicate Bank, Bank of Baroda, Bank of India. Initially we are targeting public sector banks, we started marketing only from January this year. The buildings were not ready. So we went in a strategic and orderly manner. Charity must begin at home so you must first serve yourself. We therefore first focused on public sector banks, then public sector insurance companies. Then we looked at private banks of Indian origin like Axis Bank, ICICI and HDFC Bank. We have now started interaction with foreign banks like Citibank, Bank of America and HSBC.

 

How easy has land acquisition been here?

Fortunately, for us, 85 per cent of the land belongs to the government. Transferring it therefore was not a problem. The government has transferred this land for `1. So while pricing this we are not charging land price. We offer incentives to come here. We only recover the infrastructure cost and the developers take the construction cost. So this becomes competitive compared to many other places. In view of its special status as also to ensure proper management and quality of services, GIFT has been notified as a separate municipal corporation area and we have been given responsibility for managing it. Our responsibilities extend to four areas, which is of developer, urban development authority, a municipal corporation and a power distributor.

 

What are you doing about airports and such other linkages outside the GIFT zone?

As this will be a global financial hub, we will have linkages not only with Ahmedabad and Gandhinagar, but a lot of business will be from cities from around the world. So we will be looking at very strong linkages from the airport. The existing airport in Ahmedabad has its limitations and in the coming years will not be able to handle additional traffic. That is why the government has started to develop a new airport in Dholera. We have to foresee the requirements in five-six years time. There should be no bottlenecks. Similarly there is a need for a metro system. Such a populous place cannot survive only on cars. So we are interacting with the state government and metro authorities for extending metro services to the GIFT area. Things are moving. We are also exploring on developing a diplomatic complex here. There will be far too many expats coming from outside who will require help from their respective embassies and consular offices for passport, visas and other needs.

 

What is the cost of project?

Our infrastructure projects cost around Rs.10,000 crore. This includes internal roads, water supply etc. And the buildings, including the interiors, will cost another Rs.60,000 crore. This means the project will cost up to Rs.70,000 crore.   

 

What is the timeline for completion of this entire project? What percentage of the City is functional now and how much more requires to be done?

Ten years. Compared to the total, it is around 15 per cent. We just started two and half years back.

 

What is your source of funding?

Initially, we have to raise money from the market. But after that, it will be self sustaining. There is something we have arranged, selling of development rights. We have already sold 10.6 billion sq ft of development rights and we have also arranged for a consortium of banks to deliver funds by using land as mortgage. The government, meanwhile, is supporting us by creating external infrastructure like road connectivity, metro and BRTS. And they are also helping us in framing rules and marketing this project. We have got a lot of support both from the state as well as central government.

 

What is the interest generated for your project abroad? Have you done some marketing and branding, road shows perhaps?

Not yet, but we will get there. But we have signed an agreement with the Singapore government which wants to set up its branches in GIFT because their financial services are expanding and they have no space to operate from within their country. So it becomes like a sister organisation. We are also exploring tie-ups with international financial services centres in Dubai, Tokyo and London.

 

Would you characterise GIFT as India’s first smart city?

It is not just smart for India but for the world. GIFT City is the only place where a smart city is being developed. Here everything is smart. Hence our slogan ‘Gift to the Nation and the World.’




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