By Craig Mellow
Last month, as Iranian ordnance rained down on Dubai, hotshots from India's Gujarat International Financial Tec-City, or GIFT City, were pitching power points to financiers in New York. The timing was resonant.
India is the world's fastest-growing major economy, with more than 5,000 listed companies and annual capital needs around $200 billion. But taxes, bureaucracy, and capital controls have kept its financial plumbing offshore where possible, in Singapore, Mauritius, or Dubai.
GIFT City is Prime Minister Narendra Modi's solution to this problem, a special economic zone located not-so-conveniently in his Northwestern home state. Founded on paper in 2015, it's gathered momentum lately, just in time for trouble to hit the desert wonder 1,100 miles to its West.
"GIFT City is rapidly evolving into a vibrant financial services hub," declared a recent joint report by HSBC and consultant Ernst & Young.
A survey by rival PwC found that two-thirds of Indian financial executives wanted to establish or expand operations in the onshore offshore.
GIFT City first flexed its muscles in 2023, wresting a standard derivatives contract on India's NSE Nifty 50 Index from Singapore. It got a big boost this January, when India's Supreme Court ruled that a Mauritius subsidiary wouldn't exempt U.S. hedge fund giant Tiger Global Management from capital-gains taxes when it sold its $1.6 billion stake in e-commerce power Flipkart to Walmart. The ruling should reduce the incentive for future investors to use offshore structures.
Modi's people were meanwhile fleshing out GIFT City's regulatory and physical infrastructure. Within the past two years, authorities codified the fine print on fund management, payment and settlement, accounting and taxation, among other essential pillars. The latest federal budget extended a tax holiday for GIFT-resident entities from 10 to 20 years.
From empty scrubland, the zone now boasts 28 "operational buildings" with 41 more under construction guided by a "walk-to-work concept," the GIFT presentation boasts.
GIFT City could capitalize on Dubai's troubles by absorbing some of its prolific ship and aircraft leasing business. Dubai's own ports and logistics giant, DP World, set up shop in GIFT last year. The real prize, financially and morally, would be luring home some of the dozens of Indian family offices that have moved to Dubai in recent years.
That is still an uphill climb. Modi's Delhi is all for easing capital flows into India, easing outflows not so much. GIFT City slammed the brakes on its family office initiative last year, concerned "about the risk of the financial center being used as a conduit to channel funds overseas," financial website ET Now reported.
Extra-financial infrastructure also remains challenging, to say the least. The closest metropolitan area, Ahmedabad, is about an hour away. Alcohol is illegal in Gujarat, a perhaps outdated homage to sober native son Mahatma Gandhi.
"People's biggest complaint is that they can't get a beer," says one financier who visits GIFT City regularly.
Staff turnover runs at least twice as high as in Mumbai or Bengaluru, PwC found. "GIFT City has considerable ground to cover before it can outpace established global hubs," comments Gayathri Parthasarathry, a financial services advisor at the firm.
It doesn't really have to, though. GIFT City can grow by nibbling away at the anomaly of a $4 trillion-plus economy relying on post boxes in Mauritius, or Dubai, for its global financial flows. Shaken confidence in the Persian Gulf could accelerate that process.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 09, 2026 12:32 ET (16:32 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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