Prime Minister Narendra Modi inaugurated India’s first international exchange – India INX – on Monday, January 9, 2017, at the International Financial Services Centre (IFSC) in Gujarat International Financial Tech City (GIFT) located in Gandhinagar.
Modi inaugurated the INX by sounding the virtual gong and termed it as a “momentous occasion for Indian financial sector”.
India International Exchange (INX) is the wholly owned subsidiary of BSE (Bombay Stock Exchange), a pioneer in the world of financial services, and being one of the world’s most advanced technology platforms, INX promises to be act as a gateway to raise capital for the country’s infrastructure and development needs.
As many as 250 trading members, including commodity and overseas brokers, have expressed interest to function from India INX.
“The exchange will create new standards in quality of service and speed of transactions in different time zones,” Prime Minister Modi said while opening the global exchange.
Advantages of an International Stock Exchange
- Trading of stocks between countries across the globe becomes easier.
- There is flexibility to settle in any currency.
- International Stock Exchange allows the trader to capitalise on foreign exchange fluctuations.
- Researching international stocks becomes easier with access to real-time market data from around the world and around the clock.
- International trading specialists will be more easily approachable for advice on stocks.
- It helps provide suitable regulatory regimes and create a business environment to promote talent and increase capital flow.
- They create significant economic value for their domestic economies by contributing more towards the GDP.
Features of INX
The India International Exchange will have the following features:
- Initially, the INX will start trading in equity derivatives, currency derivatives, and commodity derivatives including Index and Stocks through its global exchange.
- Depository receipts and bonds will also be offered in the near future, once the required infrastructure is in place.
- The INX will work for 22 hours a day with a turnaround time of 4 micro seconds.
- It will start trading when the Japan exchanges begin, and close when the US markets end for the day. In short, the exchange will work from sunrise in the East till sunset in the West.
- This will allow international investors and NRIs to trade from anywhere in the globe.
- Cross border opportunities of investments will now be available at a comparatively low cost of transaction.
- INX is a part of GIFT IFSC (International Financial Service Centre) which provides a competitive advantage in terms of tax structure and supportive regulatory framework.
- Advantages in the tax structure include benefits in security transaction tax, commodity transaction tax, dividend distribution tax and long term capital gain tax waivers and no income tax.
- The INX will enable Indian firms to compete with the offshore firms on an equal footing.
- The exchange promises to set new standards for quality of service and speed of transactions across time zones.
- The exchange though inaugurated will begin trading operations on January 16, 2017.
Gujarat International Finance Tec-City or GIFT City is an under-construction central business district, proposed to be built on 359 hectares of land.
Located between Ahmedabad and Gandhinagar in Gujarat, the City aims at providing state-of-the-art infrastructure including electricity, water, gas, district cooling, roads, telecoms and broadband to help finance and tech firms in Mumbai, Bengaluru, Gurugram (Gurgaon) etc. to relocate their operations, as infrastructure in these cities are either inadequate or very expensive.
Gift city will be complete with a special economic zone (SEZ), international education zone, integrated townships, an entertainment zone, hotels, a convention centre, an international techno park, Software Technology Parks of India (STPI) units, shopping malls, stock exchanges and service units.
India has seen a rapid economic growth in the past decade, especially in the financial services sector. At present, the financial services sector contributes towards 5% of the GDP. However, India still has a vast potential in financial services but lacks the infrastructure to tap into it and thus, has not been able to optimise in this particular area.
GIFT aspires to cater to India’s large financial services potential by offering global firms a world-class infrastructure and facilities. GIFT City will give the opportunity to India to compete with international financial hubs with global standards in infrastructure, which will also see India attracting top talent from across the globe.
Modi’s vision of GIFT city will help it become a price-setter in several financial instruments. Modi said, “My vision for Gift City is larger. In next 10 years from now, I see Gift City becoming a price-setter for at least a few of the largest traded instruments in the world, whether in commodities, currencies, equities, interest rate derivatives or any other financial instruments.”
The inauguration of the INX foretells the new heights that India will scale in the very near future, taking it closer to the vision of being a fully developed nation.