FINANCIAL SEZ'S.

ESSAY FODDER—the hindu

FINANCIAL SEZ’S: IN VOGUE:

The proposal is based on the Percy Mistry Committee report in 2007, which had recommended a slew of reforms to enable India to set up financial districts on the lines of those in London and New York.

The financial SEZs are also aimed at attracting to India the huge volumes of global trading in rupee and the National Stock Exchange’s index Nifty that right now take place offshore in locations such as Singapore, London and Dubai.

India will allow greater capital account convertibility in financial special economic zones (SEZs).

The first such notified SEZ to benefit from the reform will be the Gujarat International Finance Tec-City (GIFT City), coming up near Ahmedabad.

“The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India are looking at drafting the regulations that will make greater capital account convertibility possible in notified financial SEZs...GIFT will be the first to BENEFIT.

It will be possible for the corporate sector to raise foreign currency loans in such SEZs the way they do overseas right now.

SEBI had set up some of the norms under its purview required for giving shape to International Financial Service Centre (IFSC) such as GIFT. The norms aim to ease the setting up of stock exchanges and capital market infrastructure in such centres.

1.    Capital account convertibility is a feature of a nation's financial regime that centers on the ability to conduct transactions of local financial assets into foreign financial assets freely and at country determined exchange rates. It is sometimes referred to as capital asset liberation or CAC.

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