India Finds Out How Hard It Is to Build a Finance Hub From Scratch

GIFT City has attracted global banks, but the community its planners promised remains far from reality.

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Episode Transcript

Speaker 1 (00:00):
Building a smart city from scratch is easier said than
done by Subadipsuka and saikhatdas read by Mike Cooper. A
world away from the traffic choked streets of Mumbai, where
he lived and worked for twenty five years, Mahesh Chabria
now begins his day with a run through his leafy
new neighborhood. The forty nine year old fund manager's service

(00:22):
department in Gift City, an up and coming financial hub
in western India, is only a ten minute drive away
from the office. Freed from a tortuous commute, he's now
enjoying a more relaxed lifestyle. I get more time to
read or do yoga as I do not have to
navigate terrible traffic every day, said Chabria, who is part
of a six member team at SBI Funds International i

(00:43):
f s C Limited and relocated six months ago. The
fresh morning air, he added, energizes him for the rest
of the day. Chabria is a poster child for Gift City,
a project close to Prime Minister Narendra Mordi's heart since
two thousand and seven when he was still Chief Minister
of Gujarat State. Modi's vision to build an international finance
hub from scratch to rival centers such as Dubai and Singapore,

(01:07):
luring overseas banks and foreign capital with streamlined regulation and
low or even no taxes. The project, also known by
its less catchy name Gujarat International Finance Tax City, is
showing signs of success. HSBC Holdings, Standard Chartered and Bank
of America occupy soaring glass fronted towers alongside more than

(01:27):
one hundred and seventy asset managers, universities, insurance companies, and
local tech giants inphasis and whipro evening exodus. But the
dream of creating India's first fifteen minute walk to work
city with advanced waste management, energy efficient cooling and a
lively social scene is far from realized. Chabrias seems to

(01:48):
be the exception rather than the norm. At the end
of the day, most of the twenty eight thousand people
working in Gift City head straight to buses and metro
trains bound for the near by cities of Ahmedabad and
Gundah Naga. A lack of restaurants and entertainment venues has
discouraged potential residents. Even the city's special carve out from
Gudarat's alcohol ban. The state is dry out of respect

(02:10):
for Mohammed Gandhi, who was born there, has failed to
entice people because of the bureaucracy of permits and designated
drinking zones. Among those making the evening exodus is Lanid
Jadov fifty, a partner at professional services firm b do
O India who's worked in Gift City since twenty twenty one.
He's been commuting twenty five kilometers sixteen miles from Shantagram,

(02:32):
a satellite township that's home to billionaire industrialist Gautamaduani's corporate headquarters,
because it offers better access to hospitals, molls and entertainment.
Jadov is moving closer, but chose to buy a three
bedroom apartment on the outskirts of Gift City for about
seventeen and a half million rupees two hundred thousand dollars,
better value than anything he could find in the city itself.

(02:54):
His new five minute commute by car is enviable when
compared to Mumbai or Delhi. He said, what we need
is to make the living conditions equally enviable. Vivik Shrevastova,
who head Zaxis Banks Gift City, Brunch also chose to
live in Chantigram. The executive said the working culture in
Gift City is on par with Hong Kong and London
and that his thirty five minute commute on a smooth

(03:16):
six lane highway is far shorter than in Mumbai. I
chose this location because it offers an ideal balance, being
equidistant from both Gift City and my son's school in Amadabad,
he said. Tax holidays rising from reclaimed marsh land near
the banks of the Sabamati River, Gift City covers about
three hundred and fifty nine hectares eight hundred and eighty

(03:38):
six acres. Tax holidays, relaxed currency regulations and a single
regulator have spurred from netic activity in the Special Economic Zone.
Banking assets in the hub have more than doubled to
ninety billion dollars in just two years. Unlike India's chaotic
mega cities, where cows, street dogs, rickshaws and trucks commonly

(03:58):
compete for space on pothole roads, it feels serene. The
infrastructure is state of the art. Utilities run through underground tunnels.
Refuse is sucked via pneumatic pipes to a central plant
and electric buses ply tree lined boulevards, but the city
is still very much under construction. Cranes dominate the skyline
and services remain sparse. On a hot July afternoon, office

(04:22):
workers gathered at the Wall Street Cafe, a bare bones
eatey and a converted shipping container, selling sandwiches and instant noodles.
Some of the glitzy towers nearby have basic food courts,
but as evening falls and eerie silence descends on the city,
buying alcohol remains cumbersome, as only permanent employees of Gift
City based companies can apply for a liquor access permit,

(04:44):
and business visitors must be accompanied by a pass holder
to get a drink when such in, Sarika held a
party for his firm, Arthur Barrett Investment Manager's IFSC. Only
six of his twenty five guests had permits. The rest
had to present passports or ID cards and can deplee paperwork,
and even then could only drink in certain spots. The
experience left him unimpressed. For Gift City to succeed long term,

(05:08):
it needs the necessary social infrastructure for rest and recreation.
Sarakasin utopian planning, like other planned from scratch smart cities.
It could take years for Gift City to take off
as a residential center. South Korea's Songdo International Business District,
conceived in two thousand and one as a high tech utopia,

(05:28):
struggled for years with a ghost city vibe and remains
incomplete two decades later. A new city must offer a
better living environment, better housing, and better jobs than in
other areas to attract residents, said Sarah Mosa, an associate
professor at Canada's McGill University who researches utopian planning. There
is little incentive to move to a new area that

(05:49):
feels boring and empty. Even oil rich Petro state struggle
to finish projects and attract tenants, Mosa said, citing King
Abdullah Economic City on the coast of the Red Sea
in western Saudi Arabia and Madinat al Kharea in Kuwait.
Builders of new cities should be more realistic about the timescale.
She said, it could take decades or even half a century.

(06:11):
Work continues at Gift City, which is slated to be
sixty seven percent commercial, twenty two percent residential and eleven
percent social facilities. A three hundred bed hospital is nearly complete.
And high ut regency is building a luxury hotel. A
central park with food courts and green spaces is under construction,
as is a redeveloped riverfront with promenades. The hub's only

(06:32):
school serves about two and a half thousand students. Gift
City recently climbed six spots to forty sixth place in
the Global Financial Center's Index, which rates one hundred and
nineteen cities worldwide on metrics including infrastructure and business environment.
That makes it the top ranked financial hub in India.
Mumbai is ranked fifty second and among Asia's top fifteen.

(06:55):
Just twelve hundred of the planned seven and a half
thousand residential units are finished. One of the developers, Shoburg,
has sold seven hundred forty units and says demand is
picking up. Between fifteen hundred and two thousand people currently
live in the city, with the population expected to exceed
twenty five thousand by twenty thirty. Infrastructure creation takes time,

(07:15):
said k Rajamaran, chairman of the International Financial Services Centers Authority,
which regulates the HUM. Over the next few years, a
lot of infrastructure under progress will come to fruition. A
spokesman for Gift City said The hub is supported by
the wider social and residential ecosystem of Ahmedabad and Gambinaga,
with new facilities being developed in line with its master plan.

(07:37):
For now, Chabrie is content with his morning runs, yoga
and short commute and happy to travel to nearby cities
for entertainment. Still, he says more social amenities would add
a new feather to the Gift Cab