Benefits of Setting Up a Business in GIFT City IFSC

Last Updated on: 31st March 2025, 04:55 pm

GIFT City (Gujarat International Finance Tec-City) IFSC (International Financial Services Centre) is quickly emerging as one of India’s most promising business destinations. Located in Gandhinagar, Gujarat, GIFT City is designed to be a world-class financial hub offering a wide range of services such as banking, insurance, and capital markets. It provides businesses with access to global markets, enhanced regulatory frameworks, and significant tax incentives, making it an attractive option for entrepreneurs and startups. As India continues to embrace globalization, GIFT City is becoming increasingly important in attracting international investments and fostering business growth. Its modern infrastructure, business-friendly policies, and access to global financial markets position GIFT City IFSC as a key player in India’s economic future. With its focus on tech, finance, and innovation, it is steadily evolving into a go-to location for setting up businesses that aim for both domestic and international expansion.

What is GIFT City IFSC?

GIFT City (Gujarat International Finance Tec-City) is a modern financial hub located in Gandhinagar, Gujarat. It is designed to cater to the needs of global financial services by offering state-of-the-art infrastructure and business-friendly regulations. One of its key features is the IFSC (International Financial Services Centre), which is a dedicated zone that allows businesses to operate under an international regulatory framework, providing access to global financial markets.

The concept of IFSC was introduced to bring India on par with global financial centers like Dubai, Singapore, and London. By offering tax incentives, simplified regulations, and access to international funding, GIFT City IFSC is poised to become a leading financial hub in Asia.

Location: Situated in Gandhinagar, Gujarat, GIFT City is strategically positioned to offer easy access to major global markets, making it an attractive destination for businesses seeking international expansion.

Establishment and Growth: GIFT City was launched in 2007 with the vision to develop India’s first smart city dedicated to financial services. Since then, it has grown exponentially, with major financial institutions, tech companies, and startups establishing their presence. The development of GIFT City is closely aligned with India’s goal of becoming a global financial powerhouse, enhancing its competitiveness in the international business landscape.

Recently, GIFT City made a significant leap in global recognition, ranking 46th in the Global Financial Centres Index (GFCI), a substantial improvement from its previous position of 52nd. This ranking highlights GIFT City’s growing influence in the global financial ecosystem. Furthermore, GIFT IFSC has been recognized as the top center on the Reputation Index among the emerging financial hubs worldwide. With such rapid progress, GIFT City is well on its way to becoming a leading financial hub in Asia, offering a robust infrastructure and business-friendly regulatory environment for both global and domestic players.

Key Benefits of Setting Up a Business in GIFT City IFSC

Setting up a business in GIFT City IFSC offers a range of compelling benefits, making it an attractive choice for entrepreneurs, investors, and multinational corporations. Here are the key advantages that make GIFT City an ideal destination for business establishment:

1. Access to Global Financial Markets

GIFT City IFSC is designed to facilitate global business operations. It allows businesses to tap into international financial markets and offers access to global investors, enabling smoother cross-border trade and investments. Companies based in GIFT City can easily access offshore funds, which is a significant advantage for businesses looking to scale globally.

2. Tax Benefits and Incentives

One of the standout benefits of setting up a business in GIFT City IFSC is the tax incentives. Companies operating in IFSC are eligible for substantial tax exemptions which includes tax holiday for up to 10 years on income earned by IFSC entities

These make it an incredibly cost-effective location for financial services, startups, and technology firms looking to minimize their tax liabilities.

3. Regulatory Ease and Simplified Compliance

The regulatory framework in GIFT City is business-friendly and designed to foster entrepreneurship. The financial services regulations are in line with global standards, providing businesses with a transparent and predictable environment to operate. Compared to traditional business hubs, GIFT City simplifies processes like company registration, compliance, and reporting, saving businesses time and resources.

4. World-Class Infrastructure

GIFT City boasts state-of-the-art infrastructure, including smart city technologies, advanced communication networks, and green buildings, all of which help businesses optimize their operations. Additionally, the city is equipped with modern office spaces, IT facilities, and top-tier amenities that cater to the needs of global businesses, ensuring that companies have everything they need to succeed.

5. Cost-Effective Operations

Setting up and running a business in GIFT City IFSC is cost-effective due to the city’s focus on minimizing operational expenses. Compared to other Indian cities, GIFT City offers lower operational costs, including lower office rental rates, reduced utility costs, and affordable labor. This makes it an attractive location for businesses looking to optimize their bottom line.

6. Boost to Startups and Innovation

GIFT City is also emerging as a hub for startups, especially in sectors like fintech, blockchain, and technology. With its business-friendly policies, global market access, and abundant networking opportunities, it provides a conducive environment for startups to innovate and grow. Moreover, GIFT City offers accelerator programs and venture funding initiatives to help entrepreneurs scale their ventures.

Financial and Tax Advantages of GIFT City IFSC

One of the most significant attractions of setting up a business in GIFT City IFSC is the financial and tax advantages that it offers. With a range of tax incentives, businesses operating in GIFT City can save significantly, making it an ideal location for entrepreneurs, startups, and financial institutions looking to optimize their tax liabilities. Here’s a breakdown of the key financial and tax benefits:

1. Corporate Tax Rates

Businesses setting up in GIFT City IFSC can benefit from reduced corporate tax rates, offering a significant advantage over standard tax rates in India. Companies operating within the IFSC may qualify for a tax rate as low as 9% for certain activities, especially those in financial services and technology sectors. However, this reduced rate applies in specific cases and is subject to the provisions of the Alternative Minimum Tax (AMT) or Minimum Alternate Tax (MAT), which ensures that businesses pay a minimum level of tax even if they qualify for the tax incentives. This setup is designed to attract global players while maintaining a balanced tax system.

2. Capital Gains Tax Exemptions

One of the standout features of GIFT City is the capital gains tax exemption available to businesses and investors. However, it’s important to note that this exemption primarily applies to non-resident investors and is subject to specific conditions. Companies and investors operating in the IFSC can enjoy exemptions from capital gains tax on certain investments, which makes GIFT City an attractive destination for global investors. This is especially beneficial for venture capital firms and private equity investors, as they can reinvest their gains without the usual tax implications, provided they meet the required criteria.

3. GST Exemptions

GIFT City also offers significant GST exemptions for businesses. Since every IFSC unit is considered a unit in a Special Economic Zone (SEZ), it is eligible for the same GST benefits as any SEZ unit under Indian GST laws. These exemptions include the reduction or elimination of GST on transactions such as the export of services, financial services, and other activities conducted within the IFSC. This makes GIFT City particularly advantageous for businesses in sectors like banking, insurance, and capital markets, as they can benefit from a simplified GST regime that promotes cross-border transactions and enhances the ease of doing business.

4. No Capital Gains Tax on Offshore Investments

For businesses looking to attract offshore funds, GIFT City IFSC offers a significant advantage. Offshore investors enjoy the benefit of no capital gains tax on their returns from investments in businesses operating in the IFSC. This exemption makes GIFT City an attractive option for foreign investors seeking to capitalize on India’s growing financial sector while minimizing their tax exposure.

5. Exemptions for Offshore Funds

Another key benefit for international businesses and funds is that GIFT City provides specific exemptions for offshore funds, along with a tax-neutral relocation framework. This allows offshore funds to relocate to the IFSC without facing adverse tax consequences, ensuring that they can continue to operate with favorable tax treatment. These funds benefit from exemptions from income tax on certain earnings, enabling offshore investors to structure their investments in a tax-efficient manner while gaining access to India’s lucrative financial market.

Ease of Doing Business at GIFT City IFSC

Setting up a business in GIFT City IFSC is designed to be a seamless process, thanks to its business-friendly policies, simplified regulations, and dedicated support for entrepreneurs. Here’s how GIFT City makes it easy to start and grow a business.

1. Business Setup Process: A Step-by-Step Guide

Setting up a business in GIFT City IFSC is a streamlined process that offers several advantages, including simplified regulations and financial incentives. Below is a detailed, step-by-step guide on how to establish your unit within the GIFT City IFSC framework:

Step 1: In-Person/Virtual Meeting with IFSCA & GIFT Officials The first step involves a meeting with IFSCA (International Financial Services Centres Authority) and GIFT City officials. This meeting can be conducted either in person or virtually to demonstrate your business use case for GIFT IFSC.

Step 2: Identify Office Space and Obtain Provisional Letter of Allotment (PLOA) Next, identify office space within the GIFT SEZ (Special Economic Zone), finalize the agreement with the developer, and obtain a Provisional Letter of Allotment (PLOA). This document is crucial for the official approval process.

Step 3: Submit SEZ Application and IFSC Registration Application You will need to submit both the SEZ application to the Administrator (IFSCA) for setting up a unit in GIFT IFSC, as well as a separate application for obtaining the necessary IFSC registration or license.

Step 4: Unit Approval Committee (UAC) Hearing Once your applications are in place, the IFSCA will invite you to a hearing with the Unit Approval Committee (UAC) to discuss and evaluate your business proposition. This step is essential for securing approval to operate.

Step 5: Obtain ‘Letter of Approval’ and In-Principle Approval If the UAC approves your application, the Administrator (IFSCA) will issue a ‘Letter of Approval.’ Additionally, IFSCA will provide in-principle approval, enabling you to proceed with the next steps.

Step 6: Submit Bond Cum LUT and Obtain Eligibility Certificate To proceed with business operations, submit the Bond Cum LUT (Letter of Undertaking) to the Administrator (IFSCA) and obtain an Eligibility Certificate. You will also need to complete necessary registrations, such as RCMC (Registration-cum-Membership Certificate), IEC (Import Export Code), and GST registration.

Step 7: Open Foreign Currency and SNRR Bank Accounts Once the approvals are in place, open the necessary Foreign Currency and SNRR (Special Non-Resident Rupee) bank accounts to ensure smooth cross-border transactions and financial operations.

Step 8: Kickstart Your Business Operations With all approvals and documentation completed, you are ready to start your business operations in GIFT City IFSC. You can now take full advantage of the regulatory and financial benefits GIFT City offers.

This simplified setup process makes it faster for businesses to get up and running in GIFT City IFSC.

2. Dedicated Support for Entrepreneurs

GIFT City IFSC goes beyond just providing infrastructure – it also offers dedicated support for entrepreneurs. The Indian government, along with various financial institutions, backs several programs designed to assist businesses at every stage of their journey. These include:

• Networking Events: GIFT City hosts regular events, conferences, and forums where entrepreneurs can network with investors, industry leaders, and other business owners. These events provide valuable opportunities for collaboration and growth.
• Funding Schemes: The government offers multiple funding options, including venture capital and seed funding schemes, to help startups and small businesses secure the capital they need to grow.
• Legal Assistance: Entrepreneurs can access legal support through IFSC’s regulatory bodies, which help ensure that businesses comply with all legal requirements. Additionally, GIFT City offers services to help businesses navigate international laws and regulations, which can be particularly beneficial for those dealing with cross-border transactions.
  

3. Simplified Regulations

One of the most attractive features of GIFT City IFSC is its business-friendly regulatory framework. Unlike traditional business hubs, GIFT City offers a simplified process that reduces bureaucratic delays and regulatory burdens. Here’s how:

• Single Window IT System (SWIT): GIFT City’s single window clearance system helps businesses obtain necessary approvals quickly, minimizing paperwork and making it easier to start a business.
• International Standard Regulations: The regulatory framework in GIFT City is modeled after global financial centers such as London and Singapore. This makes it easier for international businesses to set up operations in India and ensures that businesses adhere to global standards.
• Efficient Compliance Requirements: With simplified taxation rules, financial regulations, and corporate governance, businesses can spend more time growing and less time on compliance.

GIFT City’s legal and regulatory landscape is designed to foster innovation, enabling businesses to focus on operations rather than getting bogged down by complex compliance procedures.

Infrastructure and Connectivity at GIFT City IFSC

GIFT City IFSC stands out for its state-of-the-art infrastructure and robust connectivity, making it an ideal location for businesses aiming to operate at a global scale. Here’s an overview of the infrastructure and connectivity advantages GIFT City offers:

1. State-of-the-Art Infrastructure

GIFT City is equipped with modern buildings, cutting-edge IT facilities, and high-tech office spaces designed to meet the needs of global businesses. The infrastructure at GIFT City includes:

• Business Parks and Commercial Spaces: Well-designed, energy-efficient office buildings and commercial spaces ensure businesses have access to high-quality real estate at competitive rates.
• IT and Communication Facilities: GIFT City offers robust IT infrastructure with high-speed internet, secure data centers, and advanced communication networks that support digital and tech-driven industries.
• Modern Amenities: The city features modern amenities such as 24/7 security, smart lighting, and automated waste management systems, making it a conducive environment for businesses to thrive.

These facilities not only enhance operational efficiency but also make GIFT City an attractive destination for businesses in sectors like fintech, IT, and financial services.

2. Connectivity to Global Markets

GIFT City IFSC is strategically designed to provide businesses with unparalleled connectivity to global markets. Key connectivity features include:

• International Financial Linkages: GIFT City is specifically designed to facilitate cross-border trade and global financial transactions. Businesses in GIFT City can seamlessly interact with international investors, financial institutions, and clients, gaining access to capital and markets worldwide.
• Global Business Hub: Located in India’s financial corridor, GIFT City is well-positioned to become a major global financial hub, attracting investments from foreign markets. Its proximity to international airports and ports enhances its accessibility to global businesses and investors.
• International Banking and Financial Services: GIFT City offers easy access to global banking services and financial products, making it an ideal choice for financial firms and institutions looking to expand their international footprint.

These connectivity advantages make GIFT City IFSC a prime location for companies looking to scale globally while benefiting from India’s emerging financial ecosystem.

3. Smart City Features

GIFT City’s smart city integration sets it apart from traditional business hubs. Designed as a future-ready city, it features smart technology integration in infrastructure to support the growth of tech-driven businesses. Some of the key smart features include:

• Intelligent Traffic Management: GIFT City uses advanced traffic monitoring systems to manage the flow of vehicles efficiently, reducing congestion and making commuting easier for business professionals.
• Sustainable Infrastructure: GIFT City incorporates green building technology and energy-efficient solutions, ensuring businesses can operate sustainably while reducing costs related to utilities and maintenance.
• Data-Driven Urban Planning: The integration of IoT devices and big data analytics helps in real-time monitoring of the city’s services and infrastructure, ensuring that businesses have uninterrupted access to essential services.

These smart city features make GIFT City not only a tech-forward city but also a highly efficient and sustainable environment for businesses in industries like fintech, blockchain, and technology.

GIFT City vs. Traditional Business Locations

When deciding where to set up a business, comparing GIFT City IFSC with traditional business locations like Mumbai and Bengaluru helps entrepreneurs and investors understand the distinct advantages that GIFT City offers. Below, we compare cost of setting up, tax benefits, and regulatory ease between GIFT City IFSC and other prominent business hubs in India.

Comparison with Other Business Hubs

Traditional business hubs like Mumbai and Bengaluru have long been the go-to locations for businesses in India. However, GIFT City offers unique advantages that make it a more attractive option for many companies, especially in financial services, technology, and startups. Here’s why:

• Mumbai: Known as the financial capital of India, Mumbai has high operational costs, competitive real estate prices, and more complex regulatory procedures, making it less cost-effective for businesses.
• Bengaluru: Often referred to as the “Silicon Valley of India,” Bengaluru is ideal for tech businesses but suffers from high traffic congestion, infrastructure challenges, and increased operational costs.

Tabular Comparison of GIFT City vs Traditional Business Locations

Feature	GIFT City IFSC	Mumbai	Bengaluru
Real Estate Costs	Low (affordable office spaces)	High (expensive commercial real estate)	High (premium locations like Whitefield)
Operational Expenses	Lower (energy-efficient infrastructure)	High (higher utility and maintenance costs)	Moderate (higher than GIFT City)
Labor Costs	Competitive (focused on financial and tech sectors)	High (competition for skilled talent)	High (tech talent is expensive)
Corporate Tax Rate	0% (for up to 10 years)	25-30% (higher corporate tax rates)	25-30% (standard tax rates)
Regulatory Process	Single-window clearance, simplified laws	Multiple regulatory hurdles, complex procedures	Multiple approvals, lengthy process
Global Connectivity	Direct access to global markets	High, but limited by complex regulations	High, though limited by infrastructure constraints

Key Industries and Sectors in GIFT City IFSC

GIFT City IFSC is strategically designed to foster the growth of key industries and sectors, positioning itself as a business hub for global financial services, technology, and startups. Here’s a breakdown of the primary sectors thriving in GIFT City:

1. Financial Services

The financial services sector is at the heart of GIFT City IFSC. It is designed to be a global financial hub, offering businesses access to international markets and financial products. Key financial services in GIFT City include:

• Banking: Several national and international banks have set up their operations in GIFT City, benefiting from tax incentives and global connectivity.
• Investment: The city is home to investment funds, private equity firms, and venture capitalists looking to tap into India’s growing economy.
• Insurance: GIFT City also serves as a base for global and domestic insurance companies, providing a regulatory-friendly environment to expand operations.

2. Technology and IT

Technology plays a key role in the business ecosystem of GIFT City IFSC, with significant growth in the fintech and IT sectors. The city’s advanced infrastructure and access to global markets make it an ideal location for tech-driven businesses:

• Fintech: With India emerging as a global fintech leader, GIFT City offers fintech companies tax incentives, regulatory advantages, and access to global capital.
• IT and Software Development: The city’s modern office spaces and high-speed connectivity attract IT companies specializing in software development, AI, blockchain, and more.

3. Startups and Entrepreneurship

GIFT City has become a hotspot for startups and entrepreneurship, driven by its business-friendly policies, tax exemptions, and international market access. The city encourages:

• Tech Startups: Particularly those in sectors like fintech, blockchain, and artificial intelligence.
• Global Expansion: Entrepreneurs looking to expand internationally can leverage GIFT City’s connectivity and global financial services environment.
• Incubators and Accelerators: GIFT City hosts several programs that support early-stage startups with funding, mentorship, and networking opportunities.