As per recent news reports, GIFT City (Gujarat International Finance Tec-City), would allow liquor consumption on its premises. This, in what is otherwise located in the dry state of Gujarat. There was some opposition to the move, given existing Gujarat’s no-liquor policy. However, the government insisted (rightly so) that to make GIFT City a global financial centre, it needs to offer global business leaders and talent a similar lifestyle as available in other leading financial and business cities of the world.
This piece is not about alcohol politics. Nor is it about alcohol’s endorsement. Quite the contrary. I believe there is mounting scientific evidence on the bad effects of alcohol on one’s health. These include poor quality sleep, lower immunity, brain damage, obesity, liver problems, abuse possibility and potential addiction to name a few. Alcohol, wherever possible, is to be avoided.
Yet, the move to allow it in GIFT City is welcome and was necessary to reach its stated aim of becoming a leading global financial center.
GIFT City, for the uninitiated, is a 16-sqkm of area demarcated near Gandhinagar in Gujarat for the purposes of aiding business, in particular finance, trading exchanges and other services. The city was announced in 2007, and made moderate progress in the last fifteen years. It is finally gaining traction with leading global banks and tech companies such as Google setting up centers in the last couple of years. It has a demarcated Special Economic Zone, where companies get various tax incentives. To support the companies present, there’s also other allied industries such as residential property, education, hospitality and medical services.
It is an excellent idea, for it is much better if India creates its own Special Economic Regions, rather than have India focused companies based in Dubai, Singapore or Hong Kong. Of course, making Special Economic Regions within an existing nation is not easy. Such regions require their own rules and laws, particularly in areas releated to business and commerce. Since any such city will be located on Indian territory, to have special laws would require major national legislation and poltical will. However, given the poltical stability we have now and the work already done in GIFT, there is a great opportunity now to take GIFT to the next level.
Will the availability of alcohol help? Surely it will. This isn’t just being able to have a glass of beer, but the signaling it sends out to potential investors. That India is open for business, willing to change, and even if that means taking tough decisions. Making GIFT reach its full potential will require a few more bold steps. These, if taken, will truly make GIFT a world-class international destination, located within India. Here are the top-3 ideas:
- Separate GIFT business and tax laws, with separate courts – The actual legislation required at the national level to do this will be intense, but it will set the stage for other GIFTs. Investors around the world place a huge premium on a functional, clear, precise legal system to do business. GIFT will need this to invite more investors.
- A domestic immigration of sorts – GIFT city residents would have separate IDs, and one would need one to live there. Some of this is already planned given the liquor permits will only be for GIFT city residents. However, clear GIFT residency will allow other benefits as well. Different tax laws can apply to not only companies in GIFT, but also to people living in GIFT. This incentivise people to move there. For instance, we can have GIFT residents qualify for an NRI type, or a modified-NRI type status.
- Building a city with a quality of life – A great city is not just about a place that allows you to make money. It is also a fun place to live. And fun isn’t just about going out drinking in bars. Parks, running tracks, cycling tracks, sports areas (for the public, not just for competitions). Performing arts spaces, children’s activities, senior citizens activities – all this can make a new city truly come alive and living there a great experience. Clean streets and good water matter too. Tax incentives and beer bottles only go so far. A full focus on quality of life is what will make GIFT truly shine. Ideally, this should be the case in every Indian city. However, GIFT is allowing us to experiment and create at least one world-class city. Maybe its success will be a template for other cities.
GIFT seemed like a far-fetched idea fifteen years ago. However, given where India is right now, and the progress made at GIFT itself in the past few years, it looks like we are at a special inflection point. With some more reforms and efforts, GIFT can indeed be taken to the next level, and become a real gift for the nation.