City has a global dream, but govt must play ball

MUMBAI: The much-awaited report on transforming Mumbai into an international financial centre will finally be unveiled in Delhi on Monday.

Percy Mistry, the Oxford-based development economist, who headed the committee that made several recommendations will release the report at an informal function, sources say. The committee was constituted by the government in November 2005, after finance minister P Chidambaram announced his plan to position Mumbai as a major financial hub in his Budget 2005. The committee had several financial sector experts like ICICI Bank CEO KVKamath, SBI chairman OP Bhat and UTI Bank chairman PJ Nayak as members.

As reported by ET on February 27, the committee is learnt to have indicated a three-year timeline for executing its proposals. It also has articulated the need to develop Mumbai’s physical infrastructure to attract global firms. Having examined various beauraucratic procedures, the report has made out a strong case for amendments to the Banking Regulation Act, the Foreign Exchange Management Act and the Reserve Bank of India Act to help Indian financial sector firms structure products for overseas clients and also for overseas firms to set up base here and then export financial products.

The committee’s reading is that Indians have the skills and potential to be competitive in the financial sector which it reckons could be the next driver of growth for the economy.

A recast of some of the legislation that impacts players in the financial sector is imperative since the existing legal framework does not allow the introduction of several derivative products in India. Indian banks and institutions lose out in the process since such products can now be accessed only from overseas banks. The fee outgo on this count is estimated to be quite substantial considering the growing forays of Indian firms abroad.

Mumbai was identified as the prime location for a major international centre since it is situated midway between London and Tokyo. The city thus has a time zone advantage — 4.5 hours ahead of London and 3.5 hours behind Tokyo.

The presence of two leading stock exchanges — NSE and BSE—, commodity exchanges — NCDEX and MCX — and the fact that it houses many financial sector regulators — RBI and Sebi — adds to city advantage.

Top government officials, however, feel much more needs to be done to improve the ground level situation in Mumbai. “Except for earmarking a piece of land in the business district of Bandra-Kurla complex, the state government has done very little to signal that it means business,” a top functionary of the UPA government admitted. “Amendments and procedural hurdles can be removed. But you cannot built local infrastructure overnight. There is a lot that needs to be done locally,” he said.

A few years ago, Bombay First, an NGO which had the backing of corporates, had roped in consultancy firm McKinsey & Co to prepare a Vision Mumbai roadmap to transform Mumbai. The report listed several recommendations such as improving public transport, providing low-income housing, improving the environment, setting up of a dedicated infrastructure fund besides making governance more effective. However, sceptics are quick to point out that very little has changed since then.