Introduction
Singapore is a top Asian financial centre with the best infrastructural facilities, transparent rules and regulations, as well as the availability of international finance.
However, the international financial environment is changing and new jurisdictions that can supplement the power of Singapore are coming up. A single such jurisdiction is the International Financial Services Centre (IFSC) of GIFT City, India, under the jurisdiction of the International Financial Services Centres Authority (IFSCA).
When it comes to the case of Singaporean companies and financial service providers, it is a good decision to set up shop at GIFT IFSC, and usually with the assistance of an IFSCA registration consultant at GiftCityAdvisor.
It is a blend of the reputed Singapore and the rapidly growing economy of India and the investor-friendly environment. The paper describes the ways in which companies can exploit the IFSCA jurisdiction, the financial and economic rewards that such companies can enjoy and the most profitable areas, such as global treasury, payroll services, as well as financial BPO/KPO.
These regions have many prospects of development.
Knowledge of IFSCA Jurisdiction
In 2020, IFSCA was created as the single regulator in the IFSCs of India. In comparison to the domestic regulators of India, who regulate a specific area of business banking, insurance, capital markets, or pensions, IFSCA provides a one-stop, one-window system to the international financial operations.
The global players are drawn to this jurisdiction due to the tax neutrality of cross-border transactions, simplified compliance to make it easier to conduct business, world-class infrastructure of GIFT City, Gandhinagar and the ability to conduct business in foreign currencies like USD, EUR and GBP.
This implies that Singaporean firms will be able to provide international financial services within India without being subjected to the repressive domestic-based laws, and also access the huge market potential in India.
Financial and Economic Benefits
1. Tax Incentives
- Income Tax Holidays: The units obtain a 100 percent exemption in 10 out of 15 years.
- GST Exemption: Services delivered under the IFSC are exempt to GST.
- Less MAT/AMT: The minimum Alternative Tax decreases as compared to domestic operations.
- Stamp Duty Waivers: Stamp duty on transactions in the IFSC is waivered.
These incentives are translated into high saving costs and improvement of profitability of Singaporean firms.
This is amazing, like finance experts of Singapore have calculated
$192 billion of cross-border financial growth.
2. Global Market Access
- The GIFT IFSC also enables firms to execute transactions in foreign currencies and this prevents the cost of forex conversion.
- They are able to generate capital by listing international securities, bonds and derivatives.
Companies get access to India with its 3.5 trillion economy and the increasing number of foreign investors. - This puts the Singaporean companies in a position of diversifying their revenue and increasing their worldwide presence.
4. Strategic Positioning
- Through its presence in both Singapore and GIFT IFSC, the companies are able to cross two significant
- Asian financial centres:
- Singapore: Port to Southeast Asia.
- GIFT IFSC – Gateway to South Asia and the Indian diaspora.
- This two-sidedness will make it more competitive over other hubs such as Dubai and Hong Kong, as well as enjoying the advantage of reduced costs of operation in India.
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Recommended Areas of Opportunity
Global/Regional Corporate Treasury Centres (GRCTC)
Under IFSC Registration, Multinational firms are able to centralise cash management, liquidity planning and FX risk management under the systems established by the IFSCA.
- Case in point: A Singapore-based company might require to determine its Asian Treasury at GIFT IFSC so as to control the USD, EUR and INR transactions, facilitate inter-company borrowing and reducing the foreign-exchange expenses. India also has a time zone that is favorable to co-ordinating with Asian and European markets.
Payroll & HR Shared Services
One of the opportunities that is emerging in GIFT IFSC is payroll outsourcing. Companies are able to process payrolls in multiple currencies, connect to global ERP systems and comply with the rules of different jurisdictions.
- Example: A Singapore fintech that has employees in different parts of Asia might be doing payroll and HR compliance in GIFT City, which is cheaper than Singapore but has access to Indian talent pools.
Financial BPO/KPO
India already has dominated outsourcing market. GIFT IFSC reinforces this stance by the provision of a tax-neutral environment in offering high-value financial services.
- Scope: scope administration, accounting, compliance reporting, investor relations and analytics.
To illustrate this, a Singapore asset manager may outsource fund accounting and investor reporting services to a GIFT IFSC unit at a reduced cost, meeting global standards.
Global In‑House Centres (GICs)
Captive centres Banks, insurers and fintechs have the opportunity to establish captive centres within GIFT IFSC to address back-office operations, risk, and the support of IT services.
- Example: A Singapore bank can use GIFT City to open a GIC to manage trade-finance documentation and compliance to South Asia by using the talent pool available in India.
Fintech & Innovation Sandbox
IFSCA offers a regulatory sandbox to fintech companies to test cross-border solutions in a safe environment.
- Example: A Singapore-based payments company can trial blockchain-based remittance in GIFT IFSC, with the target being India-ASEAN routes. This allows the company to be creative in a nurtured setting.
Global Perspective
At the international scale, Singaporean firms will be in a position to exploit the jurisdiction of the IFSCA, usually though the assistance of a reputable Gift City Consultant to:
- Expand its operations outside the saturated Singapore market.
- Harness the India growth story, which is set to be one of the fastest-growing major economies.
- Cater to the Indian diaspora, which is one of the important wealth and investment resources around the globe.
- Improve the competition through the reputation of Singapore and the cost efficiency and incentives offered by GIFT IFSC.
This two-fold existence creates a strong bridge between Southeast Asia and South Asia, enabling firms to seize prospects in both areas.
Risks and Considerations
Although these benefits are obvious, companies should also take into account:
- Regulatory adjustment:
- keeping up with the changing frameworks at IFSCA.
- Skill shift:
- Developing employees with specialized treasury and BPO skills.
- The level of market maturity:
- The IFSC is new in comparison to Singapore, and hence early movers have an opportunity and uncertainty.
The long-term advantages of setting up in GIFT IFSC will overcome these challenges.
Conclusion
To the Singaporean firms and financial-service providers, it is a strong offer that GIFT IFSC, with IFSCA jurisdictions, provides: tax benefits, access to the global market, ease of operation, and positioning themselves strategically in the Asian financial ecosystem.
Through the global treasury centres, payroll outsourcing, financial BPO/KPO, global in -house centres and fintech innovation, Singaporean companies can open up new pathways of growth and complement their existing niche in Singapore.
Within the global strategy, such a twin location establishes a connection between Southeast Asia and South Asia, which allows companies to diversify, innovate, and succeed in an increasingly connected financial world.