The International Financial Services Centres Authority (IFSCA) is anticipating a future where numerous Indian firms may pursue acquisitions of foreign businesses. To facilitate this, the IFSCA is in the process of developing regulations that will enable Indian companies to establish holding entities in GIFT City, located in Gujarat. This new framework is expected to be unveiled within the next four to five months.
K. Rajaraman, the chairperson of IFSCA, stated, “We are currently working on guidelines for the registration of holding companies in GIFT City. While we have existing regulations for finance companies, a structured framework for holding companies is lacking. Although ONGC Videsh has established its holding company, which manages various oil assets globally, we aim to create a comprehensive framework specifically for holding companies.”
Rajaraman also expressed his vision for India by the year 2047, anticipating increased mergers and acquisitions involving Indian companies and foreign entities. To support this growth, he emphasized the necessity of allowing Indian firms to set up holding companies in GIFT City to oversee their international subsidiaries.
He emphasized the multiple advantages of establishing a holding company in GIFT City. “Such a company could engage in equity investments, extend debt financing, and even serve as a treasury center for optimizing cash management,” Rajaraman explained.
A treasury center functions as an internal bank for multinational corporations, focusing on centralized fund management and the strategic use of global funds for the corporate group. Essential functions of these centers include intra-group financing, managing cash and liquidity, and providing financial advisory services.
Public sector enterprises like ONGC Videsh Ltd and Indian Oil Corporation have already established their Global Treasury Centres in GIFT City, which manage the treasury operations of their international assets and facilitate fundraising efforts. “The treasury center has been successfully implemented, and the first one operated by IOC is now active, having processed around $250 million in operations. We anticipate that more companies will set up their treasury centers here in the near future,” Rajaraman concluded.
