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Gujarat’s GIFT: Along with VAT, Enjoy Vat 69 Too 

Liquor prohibition regulations may be eased in the business enclave
Lack of spirits won’t become a damper for doing business in the mega financial centre Gujarat is building.The state is expected to dilute its decades-long prohibition rule for the Gujarat International Finance and Tec-City (GIFT), in its quest to make the enclave a worthy competitor to the big regional financial centres in Dubai and Singapore.Leaving alcohol out can become costly in this effort, as often business talks and deals happen around drinks.

Since the GIFT enclave will be treated as a “deemed foreign territory“, prohibition regulations will be much more liberal, GIFT City Managing Director and Group Chief Executive Ramakant Jha said. The state already issues liquor permits over the Internet to visitors to the state and “once the hotels and clubs come up in the area, the visitors can obtain their permits over the counter“, he said.

There is no specific provision to serve alcohol in the area at present, said another key functionary on the condition of anonymity . But, “keeping the international character of the place in mind, such arrangements will have to be made as a large number of inter national visitors are coming here,“ this person said.

The problem now is lack of infrastructure. The GIFT City has started functioning with some institutions already moving in, but recreational facilities aren’t in place. An under-construction club house will take a year to become fully functional, said a source.

Until then, visitors will have to manage with the existing liquor permit system, which itself has become considerably easier over the years. The Gujarat government, first under Modi when he was chief minister and now Anandiben Patel, has gone all out to make the state attractive for businessmen to visit and invest in.

The e-permit system, implemented ahead of this year’s Vibrant Gujarat Summit, authorises managers of the hotels permitted to sell liquor to verify documents and operationalise permits issued over the internet. There are 35 such hotels in Gujarat, with nine in Ahmedabad and one in Gandhinagar. The permit will be granted for a week. It can be extended, by a week at a time, for up to a month. The government also issues spot liquor permits to visitors at Ahmedabad International Airport.

Still, businessmen say prohibition has become a major hurdle in attracting investment. “We are losing out on tourism as well as bright human resources due to prohibition as consumption of alcohol is a way of life in the rest of the world, and the non-availability of it here does impact business in a negative way ,“ Gujarat Chamber of Commerce and Industry President Rohit Patel said. These impediments will have to be taken care of for the success of a big business enclave such as the GIFT City , he added.

The state had made a policy decision in 2007 allowing sale of liquor within special economic zones, but it has never been implemented.

The GIFT City is India’s first multi-service SEZ with International Financial Service Centre (IFSC) status, aimed at catering to India’s large financial services potential by offering global firms world-class infrastructure and facilities. It has already attracted several international banks.

The project was conceived in 2007, when Modi was the chief minister. Construction began in 2011 and it got the SEZ and IFSC status in the same year. Things started moving faster after Modi became the prime minister last year.

“For years we have been trying to get all the clearances from Delhi, but during last one year, thanks to the Union government, we have got all the necessary clearances from Sebi and RBI and the rules also have been framed,“ said Gujarat Finance Minister Saurabh Patel. The central government is looking at offering taxation benefits to the area, he said.

Meanwhile, a source in the GIFT City said the IFSC has yet to become as competitive as Dubai or Singapore. While the Reserve Bank of India earlier this year relaxed rules and reserve requirements for banks to start branches in the enclave, the source said the regulations are still not as good as in abroad. “We are asking for some more relaxations and incentives to make this competitive internationally ,“ he said.

In the enclave, construction is over for two towers of 29 floors. While a school has come up, work is ongoing for a data centre.

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