After relaxing insurance norms for foreign investors by the Government to draw huge fund flow to support the country's economy, global insurers are eyeing Ahmedabad-based GIFT (Gujarat International Finance Tec) City as an insurance hub. As many as 12 global insurance firms have initiated their process to set up units in GIFT City to mark their presence in order to boost the insurance business.
GIFT City is a dream project of Prime Minister Narendra Modi. The Government expects huge employment opportunity for more than 10 lakh people when the project will be fully operational. Keeping this development in view, sources, however, said that Mumbai-based large insurance broking firm has decided to set up a global skill knowledge centre to provide talents to such insurance firms there. The Government recently cleared the proposal to ease foreign direct investment (FDI) limit in the domestic insurance sector to 49 per cent from 26 per cent, signalling the Government's move to bring in huge capital and investment into the country's economy.
Confirming the development, Dipesh Shah, Vice President (Business Development), GIFT City told The Pioneer, "After April 10, when the Government eased the insurance norms for overseas insurance companies, many global players have taken interest to set up units here. Almost 10-12 international insurers have initiated their process with the Government to do business in this place."
When asked about any particular insurance firm(s), he said, "At this moment, I can not reveal their names as they are in talks with the Government for the move and they are yet to reach at a final agreement with the Government and regulator." With lukewarm response in premium growth, the life insurance business in the sector is reported to be as dull as other any other financial sector. For, insurers, banks, and other financial institutions within the country are making beelines to kick off their operations in GIFT City of Gujarat.
On business aspects, Shah added, "Earlier, we did not have dollar transaction in the insurance sector, but after the operation of international insurers here, we will be able to transact in dollar terms which will boost a lot of employment." Keeping insurers' move in the GIFT City, a Mumbai-based insurance broking firm, Global Insurance Group - the country's largest insurance broking company - has decided to set up a Global Skill Knowledge Centre (GSKC) in the locality, where the centre will provide the best talents to national and international insurance firms.
The broking firm will invest around Rs 150 crore in the GIFT City for setting up of GSKC and it will focus only on banking, financial services and insurance (BFSI) courses. "We have already acquired 2lakh sq ft land from the Gujarat Government and initiated the process of setting up our unit there. We intend to invest around Rs 150 crore in this project. We are hopeful that we can provide the insurance firms a good number of talents for their prospective business," said Prabodh Thakker, Founder Chairman of Global Insurance Group.
Most of the state-owned banks have already made commitment for their investment plans in GIFT City, which includes State Bank of India's plan to invest Rs 150 crore there. "SBI may shift its zonal head office in Ahmedabad to GIFT City. Public sector ender Bank of India is also seriously looking at having its presence there", a bank official said.
As far as insurance companies are concerned, state-owned non-life insurer New India Assurance is planning to start certain operations there too. However, insurance firms believe that there are opportunities as this will enable it to leverage its balance sheet to provide cover to global insurance companies without running any currency risk.
"The advantage of setting up a reinsurance office in an international finance centre is that the money raised by way of premium can be retained in foreign currency accounts, which eliminates currency risks when claims are paid," New India Assurance Chairman and Managing Director G Srinivasan said. "We are also looking at kicking off certain operation at GIFT so as to provide reinsurance support to the companies there," Srinivasan said, adding that he said that a model similar to the already existing model in countries like Malaysia and Singapore will be developed at GIFT.