GIFT City sees first-ever earnings with liquor sales, with little cheer otherwise
Since liquor permits were started, residential rentals in the fintech hub have shot up, but none of the gains are trickling down to state government coffers
Eighteen years after its inception, the Gujarat International Finance Tec-City (GIFT City), Prime Minister Narendra Modi’s pet project, has finally generated revenue – thanks, ironically, to liquor, which is otherwise banned in the state.
Yes, the revenue has not been generated from business ventures within the fintech hub located at the outskirts of Gandhinagar.
In little over a year, the Gujarat government has earned Rs 94.19 lakh through the sale of liquor in Gandhinagar’s GIFT City. This is the first time Gujarat has earned any revenue from the business hub project.
Liquor to rescue
The state government had lifted its prohibition on the consumption and sale of liquor within the premises of GIFT City from December 30, 2023. And this immediately made all the difference.
Since then, 3,324 litres of foreign spirits, 470 litres of wine and 19,915 litres of beer have been sold in GIFT City.
Although Gujarat had been a dry state since its formation in1969, with a ban on both the sale and consumption of alcohol, liquor permits can be issued to people visiting the state against their travel tickets.
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Individuals residents of the state and above 45 years of age can get a permit from the Narcotics and Excise Department by producing a prescription from a certified doctor saying liquor intake is necessary for the applicant’s health.
However, one doesn’t need any permit to consume liquor within the premises of GIFT City.
As per a Narcotics and Excise Department notification of December 2023, the decision was taken to attract foreign investors and companies to set up offices within the GIFT City.
Barren business area
The state government thus exempted the GIFT City area from the prohibition law with an aim to build a global business ecosystem.
However, the move did not bring any significant global business in the last two years.
After ban on alcohol was lifted in the fintech hub, only two companies pledged investment and to set up offices by March 2025.
Paytm, a home-grown finance services and payment company, announced an investment of Rs 100 crore into GIFT City. The other was Nvidia Global Field Operations, an American firm that was to partner with Tata and Reliance Industries for an AI data centre in GIFT City.
Both the projects were said to go live by March 2025. However, there has been no further development in the projects.
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Alcohol and real estate
Meanwhile, lifting the liquor ban has pushed up real estate prices within the GIFT City premises.
According to government data, residential land prices in the area were around Rs 4,300 per sq ft. These increased to Rs 7,500 per sq ft by the end of the first quarter of 2024.
“Housing and land prices in the area have gone up by 10-20 per cent since 2023. There has been a sudden surge in both commercial and residential property values in GIFT City. The lease rates of commercial office space have gone from Rs 50-65 per square feet to Rs 60-80 square feet. But the impact has been more on the residential sector,” Amolbhai Patel, who owns a real estate brokerage, told The Federal.
Liquor shops too?
According to a government notification, the two hotels within the township and the GIFT City have permission to sell liquor. Residents or employees can be served in-house at both the places. Residents of GIFT City can also buy liquor to consume at home.
“We have been told that future there might be liquor shops as well. This is a huge incentive for a dry state like Gujarat where you can get permit only if you are 45-year-old or above and it has to be renewed monthly. Within GIFT City you can have to be 21-year-old to buy or consume alcohol at hotels or the club. One just has to be resident of GIFT City. All residents get a permit that is to be renewed once a year. Hence the sudden interest in buying properties within GIFT City, where the government doesn’t levy the added tax,” said Patel.
Shooting real estate profits
Kiran Solanki, a real estate agent with an Ahmedabad-based company that deals with rental properties in GIFT City, says residential rentals have increased by around 40 per cent since December 2023.
“The rent of a two-bedroom flat in GIFT City used to be Rs 25,000-35,000 a month. Since the liquor permit was given, owners are demanding anything above Rs 40,000 a month. Anyone who works around Gandhinagar now prefers to live inside GIFT City due to the availability of liquor,” Solanki told The Federal.
The GIFT City was initially planned in 2007 across 886 acres at an initial investment of Rs 70,000 crore. Built along National Highway 8 which connects Ahmedabad with Gandhinagar, the fintech hub was structured as a special economic zone and global financial hub.
The construction work began in 2012 to make the city a viable option for even foreign nationals to settle down. To fulfil the aim, high end infrastructure like an underground utility tunnel for electricity, garbage chutes, a district cooling system and potable water through all taps were planned.
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Broken promises
But 18 years later there are still several empty plots allotted for malls, petrol pumps, office complexes and apartment buildings that are yet to come up.
So far, only one residential project is complete — the Janaadhar Mangala with houses for the lower-income groups.
By 2015, the fintech hub was to be a self-reliant township with state-of-the-art infrastructural services ranging from office spaces, residential apartments, schools, hospitals, and hotels, clubs, retail and recreational facilities.
By 2019, it was to have 22 million square feet allocated to various companies with a total committed investment exceeding Rs 240 million and generating five lakh jobs.
However, until 2014, the project did not have any taker. The management of GIFT City attributed the miserable failure to the township being located on the outskirts of Gandhinagar with no connectivity with other parts of the state and most of its infrastructure still under construction.
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Modi as PM
“Between 2007 and 2014, the project remained in limbo with no business coming and with no connectivity with other parts of Gujarat. It was not until Modi became the prime minister in 2014 that GIFT City got a major impetus with approval as India’s first operational International Financial Services Centre,” said DC Anjaria, a former director and audit committee chairman of GIFT City.
As of December 2024, the project has managed to home just about 20,000 employees across around 400 companies such as Oracle, Bank of America, Cyril Amarchand Mangaldas law firm, Citibank, State Bank of India, Bombay Stock Exchange and the National Stock Exchange.
A legal challenge
In 2018, the project saw another setback when a PIL was filed by Anjaria.
The petition alleged that the multi crore project has virtually been gifted away to Infrastructure Leasing Financial Services (ILFS), a private sector partner in the project, leading to massive losses to the Gujarat government.
“The project had already been lagging behind the schedule in 2017 when the state government signed some new contracts with the ILFS that allowed it to hike its fees and give it complete management control over the project without any significant investment or transparency in decision-making or accountability to the government,” Anjaria told The Federal.
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Private profits, govt losses
“When Gift City was conceptualised, the land was to remain with the state government and was to be given for the project on lease. But in 2017, the state government signed a new contract with ILFS and the GIFT City Co Ltd was structured as a 50-50 joint venture between the Gujarat government and ILFS.
"Around 880 acres of land was given to this project on a 99-year lease at one rupee per acre. Although the land was to remain in the government’s name, it has been fully transferred to the project company. So, revenue earned by selling properties in GIFT City goes to ILFS while the Gujarat government is still sitting on enormous revenue loss,” explained Anjaria.
“The Gujarat government can only tax revenue a company makes from running within GIFT city. The catch is that the few companies that have come to GIFT City have set up shell offices here. Their primary offices are still in Delhi or Mumbai. So, in effect, they are not making in revenue in Gujarat,” he added.
