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The GIFT that is yet to happen, if ever

April 06, 2010 03:04 IST

The Gujarat International Finance Tec-City project in near-coma

It was once seen as Gujarat Chief Minister Narendra Modi's reply to then counterpart Vilasrao Deshmukh's plans for a finance city in Mumbai.

But, three years and over 50 memoranda of understanding later, the much-hyped Rs 73,000-crore Gujarat International Finance Tec-City project, that was to come up near Gandhinagar, the state capital, remains largely on paper. The aim was to place the proposed city alongside the global financial hubs of Tokyo, Shanghai and so on.

Most of the MoUs have expired. And, land for the glitzy project (about 550 acres in the first phase) has yet to even be transferred by the state government to GIFT Ltd.

Around 250 acres of the project was to be a multi-services special economic zone. This has yet to get going, due to land transfer issues.

Meanwhile, GIFT, a 50:50 joint venture between Infrastructure Leasing & Financial Services Ltd and the state-owned Gujarat Urban Development Corporation, has approached the state government seeking Rs 2,000 crore of financial assistance for basic infrastructure, said sources.

Asked to comment, a Gujarat government spokesperson said GIFT executives were in the best position to explain. When asked, a senior official at GIFT admitted the MoUs were no longer valid and they would have to look for fresh clients, preferably overseas. He also said, "We are hopeful of making some headway in the project very soon and the Dubai problem could work to our advantage".

Adding, when asked about the company's future plans, "We have started initial groundwork at the site and would be in a position to have a start-up office in six months to a year".

The company has spent over Rs 230 crore, most of which has gone for various consultancy services, according to its financial results for 2007-08 and 2008-09.

Some subsidiaries of IL&FS are also consultants for the project. GIFT has also floated half a dozen fully owned subsidiaries for various sub-projects like water, solid-waste management and so on.

The cost of the project, estimated at Rs 17,000-18,000 crore when initially conceived, had sinceĀ  escalated to over Rs 70,000 crore, sources claimed.

Interestingly there is a statement in the agreement between the state government and IL&FS that if the government does not approve any project report and if the project is affected and not implemented due to this, then any money spent on it would be refunded by the government, said sources privy to the development.

The project also envisaged setting up a 400-metre 'diamond tower', billed as the tallest building in the country, with about 100 storeys.

GIFT's earlier project reports show that about 125 buildings spread around 70 million sq feet would come up in a period of time. The entire project is yet to get approval from the Airports Authority of India for high-rise buildings, sources said. In fact, GIFT was yet to even prepare the detailed design, sources added.

Among the companies which had signed the initial MOUs were ICICI Bank, the Kotak group, Institute of Chartered Accountants of India, IBM, Dubai Stock Exchange, DLF, Unitech, Shapoorji Pallonji, Godrej Group, State Bank of India, Union Bank of India, the Chase group, Essar and Galaxy Infrastructure have signed MoUs in the past.

Incidentally, the land in question, spread over four villages, including Shahpur and Lavarpur, had earlier been shown to Indian Institute of Technology, Powai, for setting up a satellite centre in Gujarat. "On seeing this vast spread of land, the director of IIT Powai had envisaged interest in setting up a full-fledged campus here," said an official privy to the development.

The idea later fell through.

Maulik Pathak in Ahmedabad