The incoming financial innovation of variable capital companies in India

In 2015, India witnessed the establishment of the Gujarat International Finance Tec-City ("GIFT city") and with it, its first International Financial Services Centre ("IFSC"). The main objective driving this development was to enable India to compete on a global scale with respect to cost-effective financial services and provide international market participants easy access to the Indian economy. While the IFSC has already achieved tremendous success, it is important for it to maintain a competitive edge globally. A flourishing asset management industry is crucial for the success of the IFSC, as it powers all other services and products in the IFSC. Hence, it is imperative for the IFSC to create innovative new financial contracts and instruments to meet the demands of the asset management industry. To this effect, the IFSC Authority ("IFSCA") has been considering the introduction of a variable capital company ("VCC") structure in the fund activity space.