Business

Mumbai GIFTs It Off

The country’s financial capital loses out to PM’s Gandhinagar brainchild

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Mumbai GIFTs It Off
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Big Man’s Baby

  • GIFT, Modi’s dream project for Gujarat, will be ready by 2016.
  • Mumbai has lost its sheen as a business hub because of its shoddy infrastructure, slow bureaucratic processes
  • The Bandra-Kurla complex has come a cropper owing to space shortage
  • Maharashtra is now looking at developing the Thane-Belapur corridor
  • But this will take time. Mumbai may have missed the big business bus.

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In late April, Maharahstra chief minister Devendra Fadnavis was in Israel, seeking cooperation from Tel Aviv mayor Ron Huldai for creating smart cities. But Fadnavis’s appeal was in the looming shadow of another city-related battle, a losing one at that: holding on to International Financial Centre (IFC) status for Mumbai. It all began eight years ago, in June 2007—when being a chief minister must have been far from Fadnavis’s mind. As chief minister of Gujarat, Narendra Modi had then unveiled plans for the Gujarat International Finance Tec-city (GIFT), to be located outside Gandhinagar, and projected it to become the world’s biggest IFC. At that time, Modi was of course throwing a direct challenge to then Union finance minister P. Chidambaram, who had just two months ago, April 2007, announced plans to pitch Mumbai as an IFC. Now, with Modi as prime minister, and the GIFT project powering ahead to a scheduled completion in 2016­—the first phase is nearly done—the plans for Mumbai are clearly under stress. But with its firm position as the country’s leading financial and commercial hub—so long uncontested—being challenged by other states seeking to create business hubs, it had to do something to remain a magnet for domestic and foreign investment.

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Top business honchos had met Union MoS for finance Jayant Sinha in February to urge the government to revive the 2007 Bombay-Kurla Complex (BKC) plan for Mumbai and he had assured them of the Centre’s support. Fadnavis, who was present at the meeting, had hinted that the budget would concretise that plan. But when Union finance minister Arun Jaitley presented the budget, GIFT came out the winner. Business giants say that, as it is, in the last few years, Mumbai has lost its sheen as a business hub because of its shoddy infrastructure and burdensome bureaucratic processes. Despite its stock exchanges, commodity exchanges, leading banks and financial regulators, it has been losing ground. Meanwhile, the BKC plan—blueprinted by Percy Mistry, a former World Bank economist—gathered dust.

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Modi (right) with Fadnavis and Anandiben Patel.

R.K. Jha, who heads the GIFT project, was hand-picked by the Modi government in 2007. He has energised the prime minister’s pet project, and with the IFC status announced by Jaitley in the budget, Jha says, there will be no stopping GIFT. Jha says that at GIFT, “already, development rights for 12.5 million square feet have been sold against a target of 10 million square feet”. Officials at GIFT admit that while pushing Phase I of GIFT had proved to be an uphill task, after the 2014 Lok Sabha elections, GIFT has ended up being the most-sought-after project in the country. Demand for Phase II, they say, is so high that officials are finding it difficult to meet it.  

A minister in the Fadnavis government told Outlook, “Frankly, we have already lost out to GIFT. If investors now decide to move to Gujarat, there is little we will be able to offer to lure them back. GIFT has a spectacular range in terms of tax benefits and business norms and regulations to offer. We in Maharashtra are still struggling to make BKC look presentable.”

Soon after Jaitley’s announcement of IFC status for GIFT, the Mumbai Metropolitan Region Development Authority (MMRDA), headed by the Maharashtra chief minister, started hectic work on making BKC a global finance hub. Sources in the government confirm that MMRDA has been directed to do “everything possible to sell BKC as a destination for global firms”. The task, though, is far from easy. The BKC is spread over 370 hectares with 62 buildings that house the offices of India’s top financial firms. While that may be a plus, the infrastructure in Mumbai and particularly in the BKC area is far removed from what is required for an IFC status like GIFT’s.

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Under threat, the Maharashtra government is now hurriedly altering plans, hoping to boost chances for the city and its abutting areas. Under the government’s newly proposed housing policy, at least 50 per cent of the 27 square km unused land on the Thane-Belapur Road in Navi Mumbai will be open for conversion to house Maharashtra’s International and Financial Business Centre. The rest of the area, sources say, will be used for low-cost housing.

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Speaking about the proposal, a senior minister told Outlook, “GIFT is a huge challenge and we must have a counter for it. Since BKC cannot be used as comparison, we are looking at the Thane-Belapur corridor. It is the best option available, considering it has available land and was being developed as an industrial area by the Maharashtra Industrial Development Corporation (MIDC) as far back as 1963.” Clearly, the MIDC now wants to take advantage of what could not be a successful takeoff 50 years ago.

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The new policy, likely to be announced soon, will aim to begin work within a year on land being held by business houses as non-functional factories in this area of Navi Mumbai. Leaseholders will also be expected to put the land they are holding to use. That, in a way, will help the government clear up the slums that have come up in the area over the years. The government believes that Navi Mumbai, with its uninterrupted power and water supply and spacious roads, stands at a huge advantage compared to the crippled infrastructure available in BKC. It will perhaps then help Mumbai meet GIFT at least half-way if Maharashtra wants to remain in the race for financial prowess.

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But the aggression for Mumbai as IFC may have come a tad late. Senior BJP members in Maharashtra BJP feel “eight years is a long time to lose in bureaucratic hassles. There is no comparison between GIFT and Mumbai’s financial hub.” Some others say that GIFT is Modiji’s dream—he conceptualised it in 2007 and is pursuing it with vigour. The BJP government in Maharashtra has only come to power now and there is no way anyone in Maharashtra will challenge GIFT’s status anymore. “It is a BJP project, after all,” they say.

For Gujarat chief minister Anandiben Patel, hand-picked by Modi to head the state after he became PM, GIFT’s success will be a sort of personal test, one in which she can’t afford to fail her mentor. After all, Modi has big stakes in it, having often promised to replicate Gujarat all over the country. Even as GIFT managing director and group CEO Jha says that GIFT must not be seen as a competition to Mumbai but as a complementary centre, there will be little comfort for the Maharashtra chief minister in those words.

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