The Insurance Regulatory Development Authority of India (IRDAI) has issued enabling regulations for undertaking offshore insurance business in Gujarat International Finance Tec-City (GIFT), India’s only operational International Financial Services Centre (IFSC).
GIFT is being developed as a global financial and IT services hub, a first of its kind in India, designed to be at or above par with globally benchmarked financial centres.
Under the regulations, for the first time in the country, foreign insurers are permitted to open IFSC Insurance Office (IIO) at GIFT IFSC. As GIFT IFSC has been notified as foreign territory by Govt. of India the foreign direct insurers (life, non-life & general) & foreign re-insurers are now permitted to open offices and undertake dollar denominated business there.
Ajay Pandey, MD & Group CEO, GIFT City, said “The vision of Honorable Prime Minister of India of making India a Hub for International Financial Services can be achieved with business friendly regulations and competitive tax regime. We are thankful to Department of Financial Services & IRDAI for issuing business regulations for IFSC which would go long way in making GIFT IFSC a hub for Offshore Insurance business.
“GIFT IFSC already hosts 3 major insurance players, GIC Re, New India & ECGC, and five insurance broking entities. With the business guidelines in place, we are now hopeful that foreign & domestic insurance companies would participate in making GIFT IFSC a hub for International Insurance business.”
Government of India has provided competitive tax regime for the IFSC units and thereby units are provided 10 year tax holiday (of which the first five years is a complete tax holiday and for next five years there’s a tax reduction of 50 percent),which is applicable for all insurers operating within GIFT IFSC. For export of services, Insurance Companies operating from IFSC are exempted from GST.
GIFT IFSC, being a foreign territory mainly conducts offshore business. Thus, the restriction on shareholding does not apply in IFSC and thereby a foreign direct insurer has option to set up operations directly without any local partner.
The move would also help Indian Insurers to set up their offshore office in GIFT SEZ IFSC to undertake dollar business which otherwise was restricted in India. This would become a big enabler for Indian direct and re-insurance players as it provides them a foreign branch in close proximity which would be operationally cost effective.
IRDAI, GIFT, IFSC, Insurance, India, Asia Pacific