It is no secret that the Maharashtra government is not happy with India’s first international financial center (IFC) coming up in the GIFT city in Gujarat. Instead, they feel that Mumbai – India’s financial capital – should have been considered.
“You are right. Mumbai should have been first, but I can promise you this, we have opportunities that no one else has,” proclaimed Chief Minister Devendra Fadnavis.
That may be why he announced the launch of an international finance center in the Bandra-Kurla Complex during the ‘Make in India’ week, an event that saw nearly 2,500 MOUs totaling nearly 8 lakh crores in investments being signed. While these are impressive numbers, experts say a lot needs to be done before Mumbai can hope to be counted among global international finance centers.
Is Mumbai’s Infrastructure good enough for global investors?
The answer is simply no. The government’s attention is focused on big-ticket showpiece projects like the coastal road while the task of upgrading existing infrastructure including roads, water supply systems and affordable housing goes ignored. Step outside the BKC and investors will have to face the same problems Mumbaikars face on a daily basis.
“In the Indian context, the pace of infrastructure is not up to for global standards. To have expectations that all this infra will fall in place in a very short time is unrealistic. The government needs to think about the next 30 to 40 years, they need to think big,” says Sanjay Dutt, Executive MD at Cushman & Wakefield South Asia.
What about access to cheap land?
That is a problem too. The BKC is among the costliest areas in the city and land continues to be in short supply as the MMRDA opens up plots in phases. Financial and Service based industries are unlikely to move here until costs are rationalized. While peripheral business districts like Thane & Mulund are cheaper, poor infrastructure and connectivity will not make them a preferred option. The government has to come up with radical measures to solve this.
“In the current form, with land rates as they are, this will be a very serious deterrent for the city. Something can be done if the government is serious. The government can create a pool of land out of the port trust land, mill land area, salt pans, which can be pooled to create a huge chunk. The govt can also come up with a mechanism like giving higher FSI or giving more financial incentive,” says Anil Pandit, CEO & MD of Quantum ProjectInfra.
Is Mumbai at risk of losing its thunder?
Competitors such as Pune and Bangalore are eagerly waiting to take advantage of Mumbai’s weaknesses, with both offering better infrastructure and cheaper land. The GIFT city scored a goal in the Union Budget which allowed it 9% Minimum Alternate Tax rate, making it a very attractive choice for investors. Sources tell NDTV that the government is considering giving higher FSI in the BKC to help investors gain access to cheap land, while pursuing GIFT City like tax benefits for BKC.
But the government needs to move fast on this and provide a supportive environment for the massive amount of investments that have been promised; otherwise it may find itself only playing catch up to its competitors.
Nikhil Narayan Sivadas, Assistant Editor, NDTV