Mohandas Pai asks PM Modi to intervene as GIFT city halts approval, ‘this goes against everything you are asking…’

Former Infosys CFO Mohandas Pai has drawn the government's attention to a new regulation by the Gujarat International Finance Tec-City (GIFT) regulator that prevents local family offices from setting up investment funds in the new finance hub. Mohandas Pai says this would hamper global investments.

He shared his concern in a social media post on X, writing, “pm@ narendramodi Sir this goes against everything you are asking Indians to do to globalise, compete globally and build a developed India! That needs global investments, understanding of trends, creation of networks. Pl intervene @PMOIndia [sic].” 

Mohandas Pai addressed his views by sharing a post by another user, Rajeev Mantri, who stated that the proposed regulation will not allow access to critical international technologies.

“Here we go again: Indian regulators have stopped allowing local family offices to set up investment funds in its new finance hub, as they are concerned these arrangements may be used to evade taxes and capital controls [sic],” the post by Rajeev Mantri read. 

“Yet another pathetic decision by a regulator, which cannot stop celebrating some random award given out by a third rate Italian magazine. The cost of this is: Indian financial investors cannot buy and acquire critical technologies, leaving the field open to American, European, Japanese and even Chinese buyers [sic],” he added.

The user added that the new regulation will further curtail foreign investments. “Then some years later, we will go begging as a country to the same foreign countries for FDI. The regulator will grin at winning another prize for its “macro prudential” approach. The only risk free existence is when you are dead [sic],” it read.

Concerns about tax evasion

Recently, market regulators have stopped allowing local family offices to set up investment funds in its new finance hub due to concerns about tax evasion and capital controls, according to Bloomberg. 

After feedback from the Reserve Bank of India (RBI), the regulator for GIFT City has stopped approvals for family investment funds.

The RBI has raised the concern that easing capital controls may result in money laundering. This new move may impact GIFT City’s ambitions to be a one-stop shop for wealthy individuals seeking overseas investments. The finance hub in Gujarat was set up as a free-market pilot project with different rules on taxes and capital flows.