IC Universal Legal last week opened an office in the Gujarat International Finance Tec-City (GIFT), with Cyril Amarchand Mangaldas, hot-on-its-heels, announcing today that it had also done so.

The two law firms’ moves follow a new February 2021 regulatory regime in the GIFT special economic zone (SEZ) announced last month. J Sagar Associates (JSA) after having been first to open in the GIFT in 2017, had not renewed its licence during the pandemic.

IC Universal wrote in a statement last week: “The firm has opened its branch office in GIFT IFSC and has become the first law firm to receive the regulatory authorisation from International Financial Services Centres Authority (IFSCA) to provide legal, regulatory and compliance services from IFSCs.”

Its office will be led by Mumbai-based senior partner Tejesh Chitlangi, alongside partner Aayush Modi, who is also leading IC Universal’s Ahmedabad office.

Chitlangi said that the IFSCA regime had been notified on 10 February 2021 as we had reported at the time, and IC Universal was the first law firm to get regulatory authorisation, which had involved a “rigorous and long process of authorisation”, which took around two-and-a-half months.

The main business case for opening up there was that several alternative investment funds (AIFs) and asset managers were moving to the Gandhingar-based SEZ. “Since we do nearly 30% of Indian AIFs and assist a majority of top 10 MFs, there is a huge scope for inbound and outbound fund structures which will be set up in GIFT IFSC,” he said. “Several domestic and offshore clients are queuing up to set up structures there. Big opportunity for a law firm to get regulated by a regulator and provide legal services there.”

As an added bonus, “fee income will be tax free as well”, Chitlangi said, since the new regulations “would allow law firms to earn dollar denominated tax free income”.

The office in the GIFT’s Pragya Tower would house three to four employees, he said.

CAM announces GIFT, sees great potential, tax incentives for companies

Approved in the same round and second out of the blocks with its announcement was Cyril Amarchand Mangaldas, which today issued a press release that it had received approvals to open up shop in the GIFT.

The office, also in Pragya Tower, would initially have two people based there in addition to being led by managing partner Cyril Shroff, finance head and partner L Viswanathan and Ahmedabad office head and partner Paridhi Adani.

Shroff commented in a press release: “We are seeing great potential for the companies setting up their offices at the GIFT City.”

“Given our experience in financial and IT/ITes sectors, we will be able to assist companies in setting up their operations in the GIFT City and cater to their future legal and regulatory requirements,” he said.

Viswanathan added: “With ease of doing business and tax incentives offered for companies, it opens up a new marketplace for financial services with global ambition and scale.”

Adani added: “The decision to have our presence in the GIFT City was a logical step in our growth strategy.”

CAM’s Ahmedabad office has around 45 lawyers, including 6 partners.

CAM had recently also announced the opening of a Singapore representative office.

What of foreign law firms?

With the first Indian law firms flocking to the GIFT under the new regulatory regime, could this create a potential appetite for a foreign law firm, one day in the distant or not-so-distant future, to open up there?

After all, as an SEZ it has pseudo-sovereignty and economic laws of India do not apply in it.

Whether that also includes abeyance of the Advocates Act and its restriction on the practice of law by non-Indians, is a question that had in 2017 stressed out the Society of Indian Law Firms (Silf) fearing the GIFT would open the floodgates.

And the new regulations explicitly allow any “Indian or foreign incorporated entity” to establish a branch of subsidiary in the GIFT to provide “ancillary services”, including legal, to the other GIFT residents.

So far, however, no foreign law firm seems to have been interested or sufficiently reassured with that to brave a foray into Gandhinagar, mid-pandemic.