Mumbai megapolis may outsize and overshadow smaller cousin Ahmedabad, but the Gujarati city, it would seem, is a David to its Goliath when it comes to weight in the corridors of power. The saga of the International Finance Centre (IFC) at Bandra Kurla Complex (BKC), announced with much fanfare in 2015 and now seemingly on ice, would appear to prove this.
An IFC in the country’s financial capital was envisaged as India’s reply to similar centres in Dubai, Qatar and Singapore. The state government claimed financial institutions operating from these countries would migrate to Mumbai, saving valuable foreign exchange and generating employment.
Housed in two buildings at BKC, it would be among the best planned sites in the country.
There was a special task force to speed things up. It was chaired by then minister of state for finance Jayant Sinha, with MP Poonam Mahajan as deputy chairperson.
Former Nasdaq president Magnus Bocker (who recently passed away), ICICI Bank managing director Chanda Kochhar and other bankers such as Bank of Baroda chief executive PS Jayakumar were also on board.
The task force held meetings throughout 2015-16 but all meetings stopped after January 18, 2017. “What is the purpose of holding meetings, when you know the project will never be cleared?” asks a state government official, who spoke on condition of anonymity.
Responding to a question in last year’s winter session of Parliament, finance minister Arun Jaitley said, “Only after the optimum utilisation of GIFT City and (when) its full potential is realised, can we think beyond that,” he had said, clearly delineating the Centre’s priority as the Gujarat International Finance Tec-City (GIFT) city, the up and coming IFC near Ahmedabad.
Officials feel a lot of work has gone waste. “Everything was done after speaking to finance ministry officials. The minster’s statement came as a huge shock. We did, however, have a niggling doubt because from day I, the Gujarat government had not been happy with our IFC move,” says one official.
“They were afraid if Mumbai’s IFC got off, then GIFT City would not work out as most businesses would prefer Mumbai over Gujarat, thanks to its cosmopolitan nature. Hence, they used their clout to stop our IFC,” the official adds.
Responding to allegations that the Gujarat government was opposed to the BKC plan, Gujarat chief secretary JN Singh tells , “We have nothing to do with this. Our IFC has already started functioning.”
Maharashtra chief minister Devendra Fadnavis, facing considerable f lak over rejection of the IFC proposal, tells ET he is optimistic. “Mumbai is a natural choice for an IFC. In fact, we should have done it much before GIFT City. Nevertheless, I think GIFT and Mumbai’s IFC can complement each other and coexist.”
The Gujarat government worked hard to market GIFT City, with roadshows in many parts of the world. However, while there was interest, not many are willing to shift base. Bankers whom ET spoke to, on condition of anonymity, say Mumbai is the perfect choice for an IFC.
Businesses are reluctant to move to Ahmedabad, which lacks the cosmopolitan nature of a big city. Socially, prohibition and the absence of a night life are other factors that work against Gujarat. Despite its shortcoming, Gujarat held the edge right from the beginning, say Maharashtra officials.
In January 2017, the state government applied for special economic zone (SEZ) status for the proposed IFC. In October, the commerce ministry replied, saying the BKC plot did not qualify as it does not have 50 hectares of contiguous land requisite under the SEZ Act.
In response to an query, Aditya Narayan, under-secretary in the commerce ministry, writes, “The proposal for consideration of a board of approval (BoA) from MMRDA for setting up an IFC was received on February 17, 2017.
Since the BoA is an inter-ministerial group, it was decided to seek the views of the department of economic affairs, which opined that the IFC is a new initiative… and, as a regulatory regime and associated guidelines are still evolving, it would be more prudent the government of India focus on resolving and stabilising regulations for Gandhinagar, as of now.” Narayan also says there is no compromise on the SEZ requirement.
State government officials admit they do not have 50 hectare contiguously, but emphasise that applying this criterion for the IFC makes no sense. “The SEZ Act stipulates 50 hectares because that is needed for manufacturing. An IFC has nothing to do with manufacturing.
In spite of our numerous attempts, the commerce ministry simply refused to hear us out,” says one official.
Meanwhile, early in 2017, the National High Speed Rail Corporation (NHSRC) demanded 0.9 hectares at the IFC site for building the bullet train terminal.
The Maharashtra government resisted, offering two alternative sites. However, it succumbed by September 2017, a few days before Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe visited to lay the foundation stone for the train project.
“It was a body blow,” explains one official. “Now there will be other infrastructure created outside the terminal that will eat into the little land we have for the IFC. We had suggested other sites but NSHRC officials were adamant about BKC. It became very clear then where things were headed.” Other officials, too, claim it’s all part of a pattern.
TASK FORCE & ITS DISCONTENTS
Bank of Baroda’s Jayakumar, part of the task force, was entrusted with liaising with the Gujarat government and “convincing” them that the two IFCs could coexist.
“We were aware of their opposition. So we proposed the IFC in Mumbai could host financial headquarters of major firms and the back offices of these firms could be in Gujarat.
It was a win-win for both. Jayakumar was supportive of the idea,” says a Maharashtra official. At the January 18, 2017, t ask force meeting, Jayakumar stunned the gathering by saying the idea would not work. Jayakumar has not responded to queries sent to him seeking an explanation for his change in stance.
At the same meeting, minister of state Sinha, too, told task force members that approval for the Mumbai IFC would have to be a political decision, a statement he now denies having ever made.
The denial is the only query he replied to, from a long list of questions concerning allegations made by Maharashtra government officials. Poonam Mahajan, who had initially claimed a lot of credit for pushing the Mumbai IFC, tells, “GIFT City and IFC BKC will coexist.
They complement each other. The bullet train terminal is not to blame for the delay. The metro alignment has to be changed and, hence, the master plan was reworked. If you have any doubts, you can speak to Arun Jaitley. The task force is expected to meet again.”
Another concerned of ficial, Kaustubh Dhavse, OSD to the chief minister, did not answer queries. ET queries to Jaitley and finance secretary Hasmukh Adhia remain answered. A session on the BKC IFC during the Magnetic Maharashtra Investor Summit in February this year was cancelled.
‘Coexistence’ apart, the dispensation is mute. With minimum fuss, Maximum City appears to have been denied its IFC, at least for the time being.