Business Opportunities

Indian IFSC Opportunity

IBUs can provide a wide range of Corporate Banking services

OpportunitiesBenefits
Foreign currency transactions Enable opening of foreign currency current accounts foroffshore / foreign currency transactions by institutional clients Ability to transact in foreigncurrency in the offshore markets from the IFSC
Deployment of funds to Indian Residents Provide ECBs to the Indian entities seeking foreign currency funds as permitted under the FEMA regulations Ability to meet the foreign currency requirements of the corporates in India, foreignsubsidiaries of Indian corporates (subject to FEMA provisions) as well as foreign companies
Deployment of funds to non residents (otherthan individual/ retailcustomers/ HNIs) The IBUs will be able to meet the foreign currency requirements of WOS/JVs of Indian corporates abroad and Foreign Corporates.
The IBUs will be allowed to provide:
  • Foreign currency loans

  • Project finance, loan syndication

  • Trade finance – import/export finance, buyers credit Buying & Selling of various currency, Providing trade loans to correspondent banks

Factoring/Forfaiting of trade receivables Provide factoring & forfaiting services as part of the trade finance requirements to the non resident entities such as WOS/JVs of Indian corporates abroad and foreign corporates Ability to tap the growing trade activitiesin the region
Raising funds from Non Residents IBUs will be able to source (or borrow) funds in foreign currency in order to meet the requirements of both Indian residents (as per FEMA) and non residents.

The long term borrowings (> 1 year) will be mostly through:

  • Borrowings from foreign banks & other IBUs

  • Debt issuance in IFSC & international bond markets

  • Bulk deposits from foreign corporates/ WOS of Indian corporates registered abroad

  • Current account balance from institutional clients

  • Market borrowings such as inter-bank borrowings, debt
    issuance etc.

  • The IBUs will also be allowed to raise short term liabilities (< 1 year) from foreign banks and IBUs

  • Ability to source funds from non residents looking to invest in the subcontinent

Ability to source funds from non residents looking to invest in the subcontinent
Dealing in derivative & structured products Deal in derivatives and structured products based on single or basket of securities, options, indices, debt securities, swaps, etc. in the foreign and IFSC markets IBUs will be able to deal with Currency Derivatives listed on the exchanges in Foreign and IFSC markets Ability to provide products to hedge the risk exposure of a portfolio

Stock/Commodity Exchanges

Opportunity
Stock/Commodity Exchange
  • Opportunity for exchanges to set up operations and offer services for a wide range of securities such as equities, commodities, equity derivatives, debt, currency & index based derivatives, etc.

  • Provide a platform for Indian companies to raise foreign currency capital

  • Provide a wide range of securities to Indian investors looking to invest in the exchanges that set up in the IFSC

  • Provide a wide range of securities to foreign investors looking to invest in the exchanges that get set up in the IFSC

Benefits
  • Lower minimum net worth requirement of INR 25 cr. initially (which should enhance to INR 100 cr. over a 3 year period) compared to INR 100 cr. which is required to set up an exchange in India (according to Securities Contracts Regulations, 2012)

  • The provision of Securities Contracts (Regulation) (Stock Exchanges) Regulations, 2012 that every recognised stock exchange shall credit 25% of its profits every year to the Fund, of the recognised clearing corporation(s) shall not be applicable to the stock exchanges operating in IFSC

  • All the transitory provisions or relaxations that were provided to the stock exchanges to comply with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 shall not be applicable to stock exchanges operating in IFSC

  • Chapter V of Securities Contracts (Regulation) (Stock Exchanges And Clearing Corporations) Regulations 2012 shall not apply to stock exchanges in IFSC

  • Provide opportunity for corporates to raise capital including Indian corporates

  • Attract investors from around the globe and also Indian investors (as per LRS)

Depositories

Opportunity
Depositories
  • Opportunity for depositories to set up operations and offer services for a wide range of securities such as equities, equity derivatives, debt, currency & index based derivatives, etc.

  • Provide Depository services to Indian exchanges

  • Provide Depository services to Foreign exchanges

  • Provide Depository services to Indian and foreign companies that get listed on the exchanges in the IFSC

Benefits
  • Lower minimum net worth requirement of INR 25 cr. initially (which should enhance to INR 100cr. over a 3 year period) compared to INR 100 cr. which is required to set up a depository in India (according to Depository Act, 1996)

  • The provision of Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 that every depository shall credit 25% of profits every year to the investor protection fund shall not be applicable to the depositories operating in IFSC

  • All the transitory provisions or relaxations that were provided to the stock exchanges to comply with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 shall not be applicable to stock exchanges operating in IFSC

  • Provisions of Chapter IIA of Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 shall not apply to depositories

Clearing Corporations

Opportunity
Clearing Corporations
  • Opportunity for clearing corporations to set up operations and offer services for a wide range of securities such as equities, equity derivatives, debt,currency & index based derivatives, etc.

  • Provide clearing services to Indian exchanges that set up in the IFSC

  • Provide clearing services to Foreign exchanges that set up in the IFSC

  • Provide clearing services to the Indian and foreign companies that get listed on the exchanges in the IFSC

Benefits
  • Lower minimum net worth requirement of INR 50 cr. initially (which should enhance to INR 300 cr. over a 3 year period) compared to INR 100 cr. which is required to set up a clearing corporation in India (according to Securities Contracts Regulations, 2012)

  • All the transitory provisions or relaxations that were provided to the clearing corporations to comply with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 shall not be applicable to clearing corporations operating in IFSC

  • Chapter V of Securities Contracts (Regulation) (Stock Exchanges And Clearing Corporations) Regulations 2012 shall not apply to clearing corporations in IFSC

Intermediaries

Intermediaries as defined in the IFSC guidelines issued by SEBI
Stock Broker Investment adviser
Sub-Broker
Merchant Banker Portfolio manager
Banker to an issue Depository participant
Trustee of trust deed Custodian of securities
Registrars to an issue Foreign portfolio investor
Share transfer agent Credit rating agency
Underwriter -

Key Highlights from the IFSC guidelines released by SEBI

Intermediaries can provide Financial Services to the following category of clients

Type of Investors
  • A person resident outside India

  • A non-resident Indian

  • A financial institution resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted

  • Person resident in India who is eligible under FEMA, to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme of Reserve Bank of India, subject to a minimum investment as specified by the Board from time to time*

* For investment advisory or portfolio management services, the person resident in India having a minimum net worth of USD 1 million during the preceding financial year will only be applicable (as per the LRS)

Permissible Securities

1. Equity shares of a company incorporated outside India
2. Commodities
3. Debt Securities issued by eligible issuers
4. Currency and interest rate derivatives
5. Index based derivatives
6. Depository Receipts
7. Other such securities specified by SEBI

Key Highlights from the IFSC guidelines released by SEBI

OpportunityBenifits
Members of International Exchanges Opportunity to become members and facilitate trading in the exchanges that will set up in the IFSC:
  • Subsidiaries of NSE / BSE

  • Any other international exchanges that will setup in the IFSC

Access to international exchanges, wide range of securities and a global pool of investors
Platform for Indian investors’ global exposure Opportunity to provide a platform for Indian investors to invest in global securities listed on the international exchanges that will be set up in the IFSC Ability to tap on Indian residents (as permitted under LRS) who wish to have an international exposure of securities such as equity shares, debt etc. (other than derivatives)
Platform for foreign investor Opportunity to provide a platform for foreign investors to invest in global securities listed on the international exchanges that will be set up in the IFSC For Indian residents, the same broker will be able to facilitate trades in the IFSC as permitted under the LRS
Offshore trading desk Opportunity to trade from the IFSC in Global capital markets such as (NYSE, LSE etc.) which many brokers are currently doing from other financial centres such as Singapore, Hong Kong, etc. Opportunity to provide a wide range of equity, debt, and derivative products
Access to global commodities and trading opportunities
Diverse products & services Apart from the trading of securities, the brokers would be able to offer:
  • Margin trading products

  • Sales & Distribution of Mutual Funds, IPOs, Insurance products

  • Investment Advisory / Portfolio Management Sales & Distribution of Mutual Funds, IPOs, Insurance products

Commodity Trading Opportunity to trade in international commodities in the commodity exchanges setup in the IFSC as well as other international exchanges such as LME, CME etc.
Asset Management
  • Setting up an offshore fund in the IFSC that sources funds from offshore investors and invests these funds in offshore markets

  • Setting up an offshore fund in the IFSC that sources funds from Indian investors (subject to LRS) and invests these funds in offshore markets

  • Investment in a wide range of securities such as equity, debt, commodities, ETFs etc (some of which are not permitted under the current regulations)

Access to customers from the global markets as well as the ability to deploy funds in the offshore markets
Tap non-resident customers (such as NRIs) who want to have a global exposure
Wealth Management / Portfolio Management Services
  • Wealth Management / Portfolio Management Services for non-India centric portfolios of non resident investors

  • Wealth Management / Portfolio Management Services for Indian residents investing abroad as permitted under the LRS

IFSC in India

Eligibility criteria for the IFSC Insurance Office (IIO)

Entities that are eligible to setup an IIO include
  • Indian Insurers

  • Indian Reinsurers

  • Foreign Insurers

  • Foreign Reinsurers

  • Brokers

Reinsurance Business

The following activities are permitted for Reinsurance business:

  • Accept reinsurance business of all classes of business within the SEZ and from outside the country

  • Accept reinsurance business from the insurers operating in the DTA in accordance with the IRDA regulations on reinsurance

Direct Insurance Business

The following activities are permitted for direct insurance business:

  • IIO may underwrite specified direct insurance business of foreign jurisdictions

Opportunities for Direct Insurance

Permitted Activities

Indian Insurers
  • Allowed to undertake direct insurance business (which includes life, general and health insurance) of the companies in the IFSC as well as the individuals working in the IFSC

  • Allowed to undertake offshore direct insurance business (which includes life, general and health insurance) of the companies/individuals present in any offshore location including global subsidiaries of Indian conglomerates

  • Tap the trade business (import and export of goods) from India and in the global market

Opportunities for Reinsurance

Permitted Activities

Indian and Foreign Reinsurers
  • Allowed to undertake reinsurance business of the companies in the IFSC

  • Allowed to undertake offshore reinsurance business of the companies present in any offshore location

  • Allowed to undertake reinsurance business in India subject to the IRDA regulations on reinsurance prescribed under section 2CA of the Insurance Act, 1938

Opportunities for Brokers

Permitted Activities

Indian Brokers
  • Allowed to place insurance / reinsurance business in the IFSC

  • Allowed to place offshore insurance / reinsurance business of the companies present at any offshore location

IT Activities in GIFT SEZ

Opportunities for IT/ITeS Companies in GIFT SEZ Area

  • Setting up R&D facilities of various IT companies

  • Setting up units in the field of BPO, KPO

  • Setting up operations of E-Commerce companies

  • Setting up Vertical IT/ITeS Parks

  • Web / Digital Content Development / ERP / Software and Application Development

Opportunities in GIFT SEZ

Opportunities for SEZ Units to carry out other activities permissible under SEZ Act

1 Trading 11 Legal data bases
2 Research and development services 12 Payroll
3 Computer software services, including information enabled services such as back-office operations 13 Remote maintenance
4 Call centres 14 Professional services (excluding legal services and accounting)
5 Content development or animation 15 Educational services
6 Data processing 16 Financial services
7 Engineering and design 17 Tourism and travel related services
8 Graphic information system services 18 Entertainment services
9 Human resources services 19 Medical Transcriptions
10 Insurance claim processing