Group 9

Aryaman Negi
Dillip Kumar Sahoo
N Balachandra Mallya
Tamashree Pal
Vivek Dharnia
 Introduction
Project Details
Phases, Current Status, Impact
Table of content Cost Structure
Funding Source
Benefit of the project
Revenue Model
Various risk and mitigation measures
Introduction
Gujarat International Finance Tech‐City Company Limited (GIFTCL) incorporated in June 2007
Envisaged to capture the growth in global financial services sector.
It is the new business destination offering competitive edge to financial services and technology-related activities.
50: 50 Joint Venture between Gujarat Urban Development Co. Ltd. (GUDC) and Infrastructure Leasing and Financial Services Ltd.
It is the first greenfield smart city project and international financial services hub in the country.
Project was initially envisaged to be implemented in three phases of four years each.

Vision
The Vision of the GIFT City project is “To develop a global financial hub for international and domestic
financial services which will serve as a paradigm for Next Class Development in terms of Quality of Life,
Infrastructure and ambience, utilizing Land as a precious resource.

The vision for GIFT is achieved through the objectives which are enumerated as follows:
To develop a new format for globally benchmarked Integrated City
To propose a road map for fast track development and implementation
To make the city scalable in each & every aspect for a distant future
To derive the city format from fast changing lifestyles & new technologies
To achieve an image of Global city, that keeps pace with modern technologies
 Gift City Project Overview
Integrated development on 886 acres of land with 62 mn sq. ft. of Built Up area
Located on the bank of river Sabarmati connecting the Business capital (Ahmedabad) and
Political capital (Gandhinagar)
Consist of a conducive Multi-Service SEZ and an exclusive Domestic Tariff Area (DTA)
Total area of 261 acres has been demarcated as SEZ and additional 625 acres has been
marked as DTA.

Target Business Segment

Gift City Infrastructure & Facilities
Infrastructure includes District Cooling System (DCS), Automated Waste
Collection System (AWCS), and Underground Utility Tunnel
Social infrastructure include international school, medical facilities, a
proposed hospital, an international exposition complex, the GIFT City
Business Club with indoor and outdoor sports facilities, a relaxation area,
Electricity cables will be underground.DCSwill reduce the operational cost
by 30-40%.
Water management leading to 35% reduction in potable water and treatment
& reuse of 100% wastewater.
 Implementation Plan: Framework

GUDCL IL&FS

JV with 50:50 share

Proposed SPV for Sub components

District Cooling Waste Management Transportation

Water System
System Services

Power ICT Service Gas

 Partners for Assessment

Design and Architecture

Market Demand
Assessment

ICT Advisory Service

Talent Demand
Assessment

Environmental Aspects

Real Estate Assessment Jones Lang Lasalle Meghraj

Legal Consultant Luthra & Luthra Law Offices

Process Management
GIFT IFSC
International Financial Service
Centre (IFSC) is a multi-service
SEZ in Gift city.
IFSC is India’s first Offshore
financial center.
Currently, there are more than 125
licensed financial entities in IFSC.
Banking sector, Insurance sector,
and Capital Markets key institutions
permitted
International (IFCs) or offshore
Financial Centers are financial
centres that serve consumers from
countries other than their own
(OFCs).
All of these centres are
‘international’ in the sense that they
deal with the cross-border flow of
money and financial products and
services.
Delivers world-class financial
services to non-residents and
residents in a currency other than
the domestic currency
Allows Indian corporate businesses
and overseas branches of Financial
Institutions to bring financial
services and transactions that are
now carried out in offshore
financial centres back to India.

Services rendered in IFSC Advantages of GIFT City

Fund-raising services for individuals, corporations and
governments
Asset management and global portfolio diversification undertaken
by pension funds, insurance companies and mutual funds.
Global tax management and cross-border tax liability
optimization, which provides a business opportunity for financial
intermediaries, accountants and law firms.
Risk management operations such as insurance and reinsurance.
Wealth management
 Current Status, Phases and Impact of the Project
The GIFT City project was conceptualized in 2007. However, the actual groundwork of the project, originally a joint venture
between the Gujarat Urban Development Company Ltd and Infrastructure Leasing and Financial Services Ltd (IL&FS), started in
October 2011 as the global meltdown following the Lehman crisis adversely impacted the project.

The first multi storied structure was inaugurated by the then CM Narendra Modi in January 2013.

Phase 1:
Involving 11.2 million square feet is under various stages of development.
About 3.4 million square feet is fully developed and operational, 2.3 million square feet is under construction and 5.5 million
square feet is under planning.
The development covers both the Special Economic Zone (SEZ) and the domestic tariff area. The SEZ has the IFSC, international
exchanges and IFSC banking units while the domestic tariff area has a hotel, the Jamnabai Narsee School and towers housing
various offices.

Phase 2:
Expected to kick start in 2015 is delayed and has started with one million square feet allotted last month to Ahmedabad-based
Savvy Infrastructures, a firm headed by the national chairman of Confederation of Real Estate Developers’ Association (CREDAI).
In the second phase, a total of 20 million square feet of development is planned for which GIFT City is expected to spend over
Rs 4,000 crore in development of infrastructure.
 T

Phase 3:

The GIFT City project is expected to be completed in its third phase spanning from 2020 to 2024.
Companies such as Tata Consultancy Services, Lemino Agro INDIA Pvt Ltd., and Dholera Metro City has fully
operational commercial offices based in GIFT City.
However only 18-20 percent of the proposed work for GIFT City has attained completion. The land which should have
been developed for 2/3rd of its portion still appears considerably vacant.

Impact of the project:

About 150 large Indian and global companies such as Oracle, Infibeam, Bank of Baroda, HDFC Bank, NSE and
Reliance Capital have already started operations in the city coming up in the outskirts of Gandhinagar and many
more are in queue to follow suit.
It is estimated that GIFT would provide 500,000 direct and an equal number of indirect jobs which would require
5.76 million square meter of real estate office and residential space.
Outlook reports that the new Bullion exchange would provide the nation an opportunity to establish itself in the
world gold market. India would have the opportunity to participate in the global value chain. The regulator would
be the International Financial Services Centre Authority (IFSCA).
 Project Cost Structure

Total Estimated Project Cost: Rs. 70,270 Cr

Core Infrastructure User Pay Utilities Real Estate

Cost Rs. 10,475 Cr Rs. 25,021 Cr Rs. 34,774 Cr

Power generation
Site development Power distribution
Office
Landscape Waste mgmt system
Commercial
Facilities Roads District cooling
Residential
Storm water drainage Gas system
Hotel
River training ICT
Parking system

PPP basis with 26%

Developer GIFTCL equity by GIFTCL
Occupier/Developer
 Funding Sources

Source of Fund Rs Crores Percentage

GIFT Unit Fund 12,426 17.68%

Strategic Investors 5,555 7.9%

Debt 17,514 24.92%

Developers 34,774 49.49%

Total 70,270 100%

 Benefits of GIFT project
Socio - Economic Benefits
Estimation of 500,000 direct and an
equal number of indirect jobs
Upliftment of nearby villages, rapid
urbanization, quality of life
City will use energy efficient district
cooling system instead of air conditioning
City will use automated waste collection
system that sucks away garbage from
building at high speed
Better urban infrastructure with external
connectivity by roads, metro, bus
Reimbursement of electricity duty & Rs. 1
subsidy on tariff
Financial - Operational Benefits
20% reduction in the operating costs
compared to other Tier I locations
Portray as financial hub, with tax benefit
to lure banks, brokerages and other
business
Capital subsidy for hardware, networking
& related hardware up to INR 1 crore
Lease rental subsidy – INR3 to 8 per sq.
ft. per month
Construction subsidy of Rs. 300 per sq. ft.
of BU for vertical IT/ ITes parks
 Benefits during business operation in GIFT

*Operational cost benefit for 1000 Staff Operations

Business Cost Efficiency -
Savings 20% reduction in operating
01 EPF contribution by the Emplyer
Upto
2-3 Crore/annum
cost compared to other
location
Savings
02 Rental
Upto
30-40 Lakh/annum
Govt of Gujrat Incentives -
Savings Attractive IT/ITeS policy offers
03 Capital subsidy for Hardware
Upto
Upto 1 Cr one time lease rental and power
subsidy, EPF reimbursement
Savings
04 Cooling System
Upto 50-60 Lakh/annum
Talent Availability - Talent
Savings available for business
05 Power Subsidy
Upto
10-11 Lakh/annum requirements

Talent Retention - Low

*Assumption: 1000 emplyees with avg salary of 5 lakh/annum attrition reduces cost in new
recruitment, training,
occupying 1,00,000 sqft retention
 Revenue Model

Management fees -

Charging management fees, service contracts to subsidiaries of

IL&FS, the sale of development rights at discount only to IL&FS,
not paying 1% fees to GoG as agreed in JV contract on sale of
development rights, not repaying GoG the land-related profit
as per government resolution even though sales revenues are
collected on development rights sold
land-related profits will accrue to the state if development
rights granted by it were sold at a commercial price. Over 16
million sq ft of development rights have been sold by Gift
City/IL&FS at commercial rates (over Rs5,000/sq ft), amounting
to at least Rs 8,000 crore. A part of this profit has to be
returned to the Gujarat government.
 Revenue Model (continued)

Scrutiny Fee for Development Permission -

The Developers have to pay scrutiny fees along with application to GIFTCL /GIFT SEZ at Rs. 5.00 per sqm. of
the proposed Built-Up Area for the intended residential or institutional Development or part thereof and at Rs.
10.00 per sqm of the Built-Up Area for the intended commercial Development or part thereof.

Scrutiny Fee for Building Occupancy Certificate -

Same as scrutiny fee for development permission.

Deposit for Tree -

At the time of Development Permission, the Developer shall have to pay an amount of Rs. 500/- per tree as
interest free deposit. The total number of trees to be planted is calculated at 3 trees/ 200 Sqm of the land
area or basement extent allotted to the Developer.
After issuance of Development Permission, the verification of the above to be made after five years and if the
trees are properly brought up and necessary arrangement is made for maintaining the trees then the
deposited amount to be refunded and if the trees are not properly brought up and necessary arrangement is
not made for maintaining them, then the security deposit shall be forfeited.
 Revenue Model (continued)

Labor Cess -

Developer have to pay to labor cess calculated at 1% of construction cost on Construction Area. In case there
is a change in the Construction Area at the time of Occupancy Certificate, the Developer have to pay the
balance amount accordingly at the rate of 1% of construction cost.

Fees of Proof Check Consultant -

Based on the BU and height of the building finalized, GIFTCL will appoint Proof Check Consultants for verifying
the structure and design proposed at the cost of the Developer. The total cost to be borne by the Developer
shall include fees of the Proof Check Consultant including GST plus 10% verification charges of GIFTCL.

Charges for obtaining copy of the approved documents -

 Various Risk and Mitigation measures
Exchange Rate Risk
Indian rupee is not fully
convertible. There are restrictions
on certain oversees transactions
that are imposed on Indian
companies and individuals. 80-
85% of the trading volume at GIFT
is proprietary trading by brokers
who take advantage of incentive
schemes and tax exemptions.
Mitigation:
Widen product base by increasing
Mitigation:
pool of securities and associated
financial products
Promoting the development of a
variegated investor base
Investing in creating an enabling
market environment like support
for Algorithmic trading firms,
launching indices
Provision for SME listing,
agreements with international
stock exchanges
Regulatory Risk
Restrictive regulatory regime that
requires nod from multiple
regulatory agencies like RBI, SEBI,
IRDA, PFRDA for multiple projects
The regulators have also been slow
in easing restrictions worried about
the fallouts of liberalizing
regulations to attract foreign and
domestic capital.
Possibility of round tripping of
money
A unified regulator to bring in
clarity and facilitate a single window
clearance as well as regulation such
as. International Financial Service
Centre Authority (IFSCA)
Liberalized ,pragmatic regulations in
terms of tax treatment of
alternative investment funds,
aircraft leasing, encouraging foreign
offshore funds to relocate to india
Corruption Risk
Alleged financial and governance
irregularities in awarding of
contracts and consultancies by
IL&FS as per the director of audit
committee. Eg Govt owned leased
land has been used to mortgage
for funds and acquire effective
ownership, thereby transferring all
the risks to the state. Allegations
against ILFS regarding related
party transactions
Management risk after the default
of IL&FS, and subsequent
ownership transfer to government
of Gujarat.
Mitigation:
Sound financial basis of executing
company
Effective project supervision
TImelines and cost must be
reviewed and approved through a
rigorous process
 Various Risk and Mitigation measures
Location Risk Competition Risk Delay Risk
ompetitve Risk
GIFT is considered to be Tough competition from Delay in the construction of the
impracticable, ignoring existing financial hubs like project resulting in cost
issues such as location and Dubai, London, Singapore, overruns.
Hong Kong that have better Conceptualized in 2007 but
skills availability.
customer liquidity construction started in 2011 due
Companies find it difficult to global financial crisis.
These hubs have freely
to source requisite talent in 18-20% of proposed greenfield
convertible currency,
absence of a well developed development has happened in
pragmatic regulations, a stable
ecosystem like in Mumbai last 10 years
tax regime and speedy dispute
Phase-II was supposed to start
resolution
Mitigation: by 2015 but started in 2021.
Phase-I is still under
Removing restrictions on Mitigation:
construction
current and capital account Facilitating ancillary services Mitigation:
transactions like accounting, legal, taxation Inviting private player to unlock
Relaxing regulations to firms the value of the project
allow residents and non- Building up of associated Liberal regulatory regime related
residents to transact in social infrastructure such as to bullion exchange, currency
foreign currency pubs, recreational facilities, derivative trading, banking
malls and other amenities regulations
THANK YOU