Foreseeing that many Indian companies could acquire foreign entities in future, the International Financial Centres Authority (IFSCA) is working on developing norms that will allow Indian companies to register holding companies in GIFT City in Gujarat. The framework is expected to be made public in the next 4-5 months.

“We are working on regulations for registering holding companies in GIFT City. We have a finance company framework, but there is no proper framework for holding companies to be registered here. Though ONGC Videsh has set up its holding company — which holds many of the oil assets across the world — we want to have a proper framework for holding companies. It is in the works, and it will take another 4-5 months,” K Rajaraman, chairperson, IFSCA told businessline.

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“When we are talking about India at 2047, we foresee a lot of Indian companies acquiring foreign companies through merger and acquisitions. Many of them set up holding companies in other jurisdictions. So we want them to set up holding companies here in GIFT City which will hold their foreign subsidiaries,” he added. 

The IFSCA chairperson pointed out that the companies will have “multi-fold” advantages of registering a holding company in GIFT City. “This holding company can make equity investments, provide debt, etc. They can also act as treasury centres that can optimise cash management,” Rajaraman added. 

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A treasury centre acts as an in-house bank in any multinational corporation. The two main objectives are centralised management of funds and use of global funds for the group. The treasury centre functions include intra-group financing, cash and liquidity management and financial advisory. 

Public Sector Units like ONGC Videsh Ltd and Indian Oil Corporation have launched their respective Global Treasury Centres st GIFT City that will manage treasury operations of their international assets and also raise funds. “The treasury centre is already enabled. The first treasury centre operated by IOC is already live. They have reached about $250 million of operations. We expect more companies to set up their treasury centres here,” Rajaraman added.