Why International Financial Services Centres have assumed prominence in the Financial Services ecosystem? Do you consider any necessity of IFSC for domestic economy ? How ?

Globally, IFSCs have assumed prominence in the financial services ecosystem primarily because of three reasons- They have contributed enormously to the growth of international financial transactions, These centres have played a pivotal role in accelerating the pace of financial globalization, and These centres have played an invaluable role in accelerating the socio-economic growth of host countries. In the last three decades, the world has witnessed unprecedented expansion in global trade and commerce. This global churn was primarily fuelled by the integration of developing countries, especially in Asia with the global financial system. These fundamental changes brought about a paradigm shift in the global economy and created huge demand for international financial services amongst developing countries. Necessity of IFSC for domestic economy Onshoring the offshore international financial services: One of the fundamental factors which incentivized India to set up its own IFSC was the fact that as one of the largest and fastest growing major economies in the world, India could no longer afford to play a passive role in the international financial services ecosystem. India had been heavily relying on overseas financial centres for the purchase of international financial services. Therefore, GIFT-IFSC was set up to transform India from being an importer of international financial services to becoming self-sufficient as well as an exporter of international financial services. Thus, the vision was of “onshoring the offshore international financial services”. India’s economic growth trajectory: More significantly, a vibrant IFSC has the potential to act as a growth catalyst for domestic Indian economy which is striving to become a USD 5 Trillion economy. Services offered in an IFSC, including Banking, Asset Management, Insurance and Capital Markets attract huge amounts of global capital inflows, such inflows can be channelized for the social economic development of India as well as to meet the Sustainable Development Goals -2030. Therefore, the development of an IFSC is an imperative step in India’s economic growth trajectory. Another driving force for setting up an IFSC within the country was to allow bright young Indian talent especially in finance and information technology field to fully exhibit & showcase their talent and expertise, who hitherto, had to travel and work in overseas financial centres.