IFSC set up under the Special Economic Zone (SEZ) Act of 2005


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

An International Financial Services Centre (IFSC) has been set up under Section 18(1) of Special Economic Zones Act, 2005. Section 18(1) says that

18(1) The Central Government may approve the setting up of Setting up of an International Financial Services Centre in a Special Economic Zone and may prescribe the requirements for setting up and operation of such Center:
Provided that the Central Government shall approve only one International Financial Services Centre in a Special Economic Zone.
Establishment of an IFSC in SEZ means that separate regulations shall be formed for an IFSC which shall be different from the rest of India. Section 49 SEZ Act states:

49. (1) The Central Government may, by notification, direct that any of the provisions of this Act (other than sections 54 and 56) or any other Central Act or any rules or regulations made thereunder or any notification or order issued or direction given thereunder (other than the provisions relating to making of the rules or regulations) specified in the notification (a) shall not apply to a Special Economic Zone or a class of Special Economic Zones or all Special Economic Zones; or

(b) shall apply to a Special Economic Zone or a class of Special Economic Zones or all Special Economic Zones only with such exceptions, modifications and adaptation, as may be specified in the notification.

Furthermore, India has several constraints in the financial sector, such as, partial capital account convertibility and foreign investment restrictions, establishment of an IFSC in an SEZ can serve as an experimental ground for financial sector reforms before they are made applicable to the entire nation.


Thursday, 07th Apr 2016, 11:14:08 AM

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