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Indian Prime Minister Narendra Modi is looking to revive a decade-old project to build a new financial hub in his home state of Gujarat, with new breaks aimed at drawing in foreign brokers and companies.

The GIFT City project was launched on the outskirts of Ahmedabad in 2011 when Modi was chief minister of Gujarat, outmaneuvering Mumbai as the choice of venue for a new tax-neutral financial centre for banks, exchanges and investment funds.

While more than 400 entities, mostly banks, have since then set up shop in the modern office blocks across the small city, employing about 20,000, the hub has struggled to develop into a thriving financial ecosystem with robust market turnover.

Modi last weekend addressed an investment conference in the city to breathe life back into the site, calling for it to become a "new age financial services and technology nerve center".

New rules that will likely take effect in April next year will allow direct equity listing of Indian firms at GIFT City - those that aren't already listed at exchanges in India - K Rajaraman, chairperson, International Financial Services Regulatory Authority (IFSCA), which regulates financial services in GIFT City, told Reuters.

Meanwhile, exchanges are in talks with half a dozen technology companies to kick-off direct listings at GIFT, four exchange and regulatory officials said.

"This will offer Indian Companies the option to raise funds in dollars without listing on more expensive foreign bourses," said V. Balasubramanian, chief of NSE's International Exchange, based out of GIFT City.

Foreign brokers will also be allowed to trade on GIFT City exchanges without having a physical presence there.

So far, the only equity product actively traded in the jurisdiction is the GIFT Nifty, which began trading in July.

TAX BREAKS

Banks currently account for the largest businesses in GIFT City, which use branches to book foreign borrowings of Indian companies.

Such borrowings attract a withholding tax of 20% in India but are given a 10-year tax relief if routed via GIFT City branches.

Total banking assets have grown to $52 billion, more than 90% of which are loans, regulatory data shows.

Close to 80 funds with commitments of $24 billion have also set up in GIFT City, including Indian funds investing in overseas assets and offshore hedge funds investing in India, according to data from the regulatory authority.

A tax exemption on business income and tax-free transfer of overseas investments, along with more liberal limits for Indian funds investing in overseas assets, have drawn interest.

"Why go to Mauritius when you have all the advantages of an offshore jurisdiction at GIFT and the benefit of being in close proximity to India?" said Richard Prattle, chief executive of True Beacon, a hedge fund based in GIFT City.

Despite some of those breaks, the city is still struggling to create the lifestyle buzz that draws money and professionals into financial hubs like Singapore or Dubai.

"It feels like the early days of Canary Wharf," said Mathias B. Pontoppidan, who works at Denmark-based ESG advisory firm Pontoka and was visiting to explore business opportunities.

New glass fronted buildings sit on barren parcels of land, public transport is limited and there are no restaurants and bars in a state that prohibits alcohol for Indian citizens.

Hasmukh Adhia, chairman of GIFT City, acknowledged social infrastructure was lacking.

"We are addressing in it phases," he said.

Many new residential buildings in the area remain unoccupied, with people choosing to live in areas that have more amenities such as department stores.

"Why is it being compared to Hong Kong, Singapore when we can’t reach here without the aid of private transport?" said Anil Shah, who works at GIFT City as a director of the Association of National Exchange Members.