When the SEBI board meets on Sunday, it will discuss a policy framework for establishing dedicated ‘FINANCE SEZs’ in the country as part of a plan to lure back the large-scale rupee and Nifty derivatives trading taking place abroad.
Roughly half of the global trading in rupee and Nifty takes place in locations such as Singapore, London and Dubai. It is felt that a substantial part of the trading in rupee and Nifty derivatives market can be captured by Indian firms, if appropriate regulatory and tax regimes are provided within the country.
Since last December, intense discussions have been on between officials of the FINANCE Ministry, SEBI and other regulatory agencies on the ideal policy framework necessary for this. With the broad contours of this policy initiative in place, the upcoming SEBI board meeting will take it forward, sources told BusinessLine.
Also, FINANCE Minister Arun Jaitley is slated to address the SEBI board on Sunday as part of customary post-Budget meeting.
Already, GIFT City in Gujarat is looking to emerge as an “offshore haven”. The international exchange of National STOCK EXCHANGE is expected to be set up within the SEZ area of GIFT City. If the fund management activity on India-related financial products is brought back to the country, there could be multiple benefits such as enhanced revenues for local authorities.
But it remains to be seen if the Center will hand out incentives such as exemption on Securities Transaction Tax on TRADES put through in the international bourses located in the ‘finance SEZ’, said experts. With the implementation of new Indian financial code and full capital account convertibility seen as inevitable for economic reforms in India, it would make sense to have a policy framework around ‘finance SEZs’, the sources said.
This could be the first step towards a larger objective and long cherished goal of creating an international financial services center in India.
The Percy Mistry Committee report in 2007 had recommended fundamental reform of finance to enable India compete with London and New York.