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International arbitration centre:

GS Paper 3:

Topics Covered: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

 

Context:

To speed up dispute resolution, Finance Minister Nirmala Sitharaman announced the setting up of an international arbitration centre at GIFT City.

  • The Centre could be on the lines of the Singapore International Arbitration Centre, or the London Commercial Arbitration Centre.

 

What is an IFSC?

An IFSC caters to customers outside the jurisdiction of the domestic economy.

  • Such centres deal with flows of finance, financial products and services across borders.

Currently, GIFT-IFSC is the maiden international financial services centre in India.

 

Regulation:

  • The International Financial Services Centres Authority (IFSCA), headquartered at GIFT City, Gandhinagar Gujarat, has been established under the International Financial Services Centres Authority Act, 2019.
  • It works as a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India.

 

Services an IFSC can provide:

  • Fund-raising services for individuals, corporations and governments.
  • Asset management and global portfolio diversification undertaken by pension funds, insurance companies and mutual funds.
  • Wealth management.
  • Global tax management and cross-border tax liability optimization, which provides a business opportunity for financial intermediaries, accountants and law firms.
  • Global and regional corporate treasury management operations that involve fund-raising, liquidity investment and management and asset-liability matching.
  • Risk management operations such as insurance and reinsurance.
  • Merger and acquisition activities among trans-national corporations.

 

Can an IFSC be set up in a special economic zone (SEZ)?

The SEZ Act 2005 allows setting up an IFSC in an SEZ or as an SEZ after approval from the central government.

 

About Singapore International Arbitration Centre (SIAC):

It is a not-for-profit international arbitration organisation based in Singapore, which administers arbitrations under its own rules of arbitration and the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.

 

InstaLinks:

Prelims Link:

  1. What are IFSCs?
  2. Can they be set up in SEZs?
  3. India’s first IFSC.
  4. Services they provide?
  5. Limitations.

Mains Link:

Discuss the significance of international financial services centres.

Sources: the Hindu.