NEW DELHI -- Gujarat, one of India's largest manufacturing hubs and Prime Minister Narendra Modi's home state, is the site of the country's first smart city built from scratch.
Launched in 2007, Gujarat International Finance Tec-City (GIFT) is Modi's dream project and a joint venture between the Gujarat state government and Infrastructure Leasing & Financial Services.
The $12 billion smart city, located 12km from Ahmedabad international airport and 8km from the state capital, Gandhinagar, aims to become a global financial hub, offering international companies world-class infrastructure.
"The project is attracting a number of companies. The Bombay Stock Exchange (BSE) Brokers' Forum has been allotted 300,000 sq. feet (27,870 sq. meters) in GIFT city for development of a commercial tower," Gujarat Finance Minister Saurabhbhai Patel told the Nikkei Asian Review.
The BSE Brokers' Forum is shifting its back office operations to a $20 million tower in GIFT city from Mumbai to cut costs. "With Gujarat being a low-cost center, naturally the cost there is lower than Bombay," said Alok Churiwala, vice chairman of BSE Brokers' Forum, which has stake of about 40% in the BSE.
The BSE is the world's largest stock exchange in terms of listed companies with more than 5,000. More stock exchanges from around the world are expected to set up operations in GIFT city in the coming years. GIFT plans to attract 6-8% of India's financial services to the new smart city.
The 358 hectare smart city is still being built, however developers are trying to speed up construction.
Gujarat, which had strong growth during Modi's tenure as its chief minister, accounts for 16% of manufacturing in India and 25% of the country's exports. "Gujarat ports also handle 33% of India's cargo," Patel said.
The idea for GIFT city came about after Modi visited Hong Kong's International Finance Center. A report by McKinsey & Co. found that financial services in India were contributing 5% to the country's gross domestic product and that the figure is expected to rise to 15-20% by 2020.
"Gujarat has been doing well in manufacturing and trading, and needed to do something in the services sector so that there's a balance in the economy," Dipesh Shah, GIFT city's vice president, told the Nikkei Asian Review.
"GIFT city's development will happen in three four-year phases, starting in 2012, 2016 and 2020," Shah said. GIFT city's tallest building, the Diamond Tower, will be 410 meters high and built in the last phase of development, Shah said.
Twelve million out of the 13 million sq feet (1.2 million square meters) earmarked for development in the first phase has been filled. "Banks like HDFC, Bank of India and Bank of Baroda have already taken space in the first of the two towers built," Shah said. Other organizations like Tata Communications, World Trade Center and State Bank of India are building their own offices.
Most of GIFT city, 67%, has been zoned for commercial development, 22% for residential development and 11% is for social facilities. A school, hospital, club, five-star hotel and a university are also planned.
"The International Finance Services Center (IFSC) at GIFT city is the only place in India where you can do offshore banking, offshore insurance and offshore asset management. Its operating guidelines are due in about four to six months, following which the city will become functional," Shah said. He also said things are moving at a much faster pace since Modi became prime minister in May.
"If India does not develop an IFSC, then every year from 2015 we will start losing $50 billion to places like London, Singapore and Dubai, which have financial service centers," said Shah.
According to Shah, GIFT city will create 1 million new jobs: 500,000 in capital-market trading and core financial services, and 500,000 support staff jobs.
He said the focus now is on developing infrastructure. "Most of GIFT city's infrastructure is a first for India. A district cooling system will be operational by December, following which we will not require individual air conditioning. We are also working on an automated waste management system and a utility tunnel. We have connected all utilities to a common command and operation center."
Shah said Japanese companies have also shown interest in GIFT city. "Jetro (The Japan External Trade Organization) and some other Japanese organizations are planning to visit the site. Japanese companies are strong in infrastructure development and smart technology, and GIFT provides both. This is the first smart city to go operational in India," he said.
The Modi government wants to build 100 smart cities in India. During Modi's recent visit to Japan he briefed Prime Minister Shinzo Abe on his smart cities project and his plan to renew heritage cities, such as Varanasi. Abe expressed support for his plans.
The U.S government also welcomed India's offer for American companies to be the lead partner in developing smart cities in Ajmer, Vishakhapatnam and Allahabad.
And the Canadian government also said it is keen to partner with India to build smart cities, pointing out Toronto, Vancouver and Calgary are among world's top 10 smart cities.