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Check out our guide to learn more about the opportunities, and the regulatory framework for India’s first IFSC. Read More!

Author: Treelife

How Foreign Companies Can Enter India via GIFT City IFSC

Posted on by Treelife

Why Foreign Companies Are Eyeing GIFT City

India is rapidly positioning GIFT City IFSC (International Financial Services Centre) as a compelling destination for foreign investment, offering global companies an opportunity to enter the Indian market through a highly regulated, tax-efficient, and globally competitive ecosystem.

India’s Push to “Onshore Offshore” Financial Services

For decades, Indian capital and talent have flowed to offshore financial hubs like Singapore, Dubai, and Hong Kong. GIFT City was envisioned to reverse this trend — creating a world-class, onshore hub with offshore benefits. Backed by the IFSCA, India’s first unified financial regulator, GIFT City enables foreign investors to operate in USD, enjoy SEZ-level benefits, and avoid regulatory fragmentation.

The strategy is clear: onshore the offshore—whether it’s fund management, insurance, fintech, or aircraft leasing.

Rising Interest Post-2019 Reforms

A wave of regulatory reforms since  2019, including introduction of provisions pertaining to direct listing of Indian companies on IFSC exchanges in 2024, expansion of scope for permissible investments by alternative investment funds (AIFs), and enhanced currency derivative trading, have drastically improved ease of doing business for foreign players.

As of December 2024, over 766 entities have set up operations in GIFT City, including global banks, asset managers, and fintech startups.

These policy moves have cemented GIFT City’s position as India’s international financial hub for MNCs looking for long-term exposure in South Asia.

GIFT City vs Other International Financial Centres

Compared to established IFCs like DIFC (Dubai), Singapore, or Hong Kong, GIFT City offers:

  • Unified regulation under IFSCA, vs multi-regulator complexity elsewhere
  • Significant tax holidays (10-year), vs standard tax regimes in DIFC/Singapore
  • SEZ infrastructure with smart city planning
  • Lower setup and compliance costs
  • Access to Indian talent pool at globally competitive rates

With political stability, a booming domestic market, and high digital penetration, GIFT City gives MNCs a strategic base to scale both into India and across emerging Asia.

What Is GIFT City IFSC?

GIFT City IFSC, or the International Financial Services Centre in Gujarat International Finance Tec-City, is India’s flagship global financial hub designed to attract foreign investment and international financial institutions. It functions as a foreign jurisdiction on Indian soil, enabling cross-border financial services with regulatory, tax, and operational advantages.

Definition and Background

Established in 2015, GIFT City IFSC is a part of a multi-services SEZ in Gandhinagar, Gujarat, aimed at providing a globally competitive financial ecosystem. It is India’s first and only active IFSC, developed to rival international hubs like Dubai International Financial Centre (DIFC), Singapore, and Hong Kong.

The IFSC allows entities to deal in foreign currencies, access global capital markets, and conduct offshore transactions—without being subject to India’s standard financial regulations like FEMA.

Role of IFSCA: India’s First Unified Regulator

In 2020, the International Financial Services Centres Authority (IFSCA) was established as the sole regulator for all financial activities in GIFT City IFSC. It consolidated powers from four Indian regulators—RBI, SEBI, IRDAI, and PFRDA—creating a one-stop regulatory body to ease operations and reduce red tape.

IFSCA’s mandates include:

  • Regulating financial products and services in IFSC
  • Granting licenses across sectors (banking, funds, insurance, fintech)
  • Driving innovation via the FinTech Sandbox and Innovation Hub
  • Creating a globally aligned, transparent, and agile financial regime

Regulatory Independence & Global Appeal

What sets GIFT City IFSC apart is its regulatory autonomy. Under the IFSCA Act, GIFT operates with its own rulebook—allowing faster approvals, minimal compliance bottlenecks, and zero overlap with domestic financial laws unless specifically notified.

This makes GIFT City ideal for:

  • Global banking units
  • Foreign portfolio investors (FPIs)
  • Offshore funds
  • Insurance and reinsurance branches
  • Digital asset experiments (under sandbox)

Overview of Key Sectors Operating in GIFT City IFSC

SectorOpportunities in IFSC
BankingOffshore Banking Units (IBUs), trade finance, ECBs, global treasury centers, structured deposits, and FPI services for NRIs
Capital MarketsInternational stock exchanges (NSE IFSC, India INX), debt and derivative listing, Depository, Clearing Corporations, and DR trading
InsuranceIndian & Foreign insurers, global reinsurers, captive insurance, and cross-border underwriting through IFSC Insurance Offices (IIOs)
Asset ManagementFund Management Entities (FMEs), Alternate Investment Funds (AIFs), Mutual Funds, Angel & VC Schemes, Family Investment Funds
FintechRegulatory sandbox, cross-border digital lending, payment innovation, account issuance, e-money, escrow, and merchant acquisition services
LeasingAircraft and ship leasing with tax exemptions, redomiciling structures, and safe harbor rules
Sustainable FinanceESG debt listings (USD 15.4 Bn cumulative), green fund incentives (fee waivers for 1st 10 ESG funds), and regulatory framework to combat greenwashing
Allied/Support ServicesGlobal in-house centers, legal & consultancy services, accounting & audit, education, R&D, and fintech accelerators

As of December 2024, GIFT City houses 2 international stock exchanges, 16 insurance entities, 25 insurance intermediaries, 139 fund management entities, 198 registered fund schemes, and a growing number of fintechs and banks operating through International Banking Units (IBUs).

Benefits of Setting Up in GIFT City IFSC for Foreign Investors

Setting up in GIFT City IFSC offers foreign investors a range of regulatory, tax, and operational benefits designed to match or surpass global financial hubs like Dubai and Singapore. Here’s why global businesses are choosing GIFT City:

1. Tax Incentives

  • 100% tax holiday for 10 consecutive years out of 15
  • No capital gains tax in certain cases, securities transaction tax (STT), or stamp duty
  • Exemption from GST on export services from the IFSC SEZ

2. Currency Flexibility

  • Conduct transactions in freely convertible foreign currencies like USD, EUR, etc.
  • Indian residents and NRIs can open foreign currency accounts within IFSC

3. Regulatory Ease under IFSCA

  • Single-window approval system for all financial licenses
  • IFSCA acts as the sole regulator—combining powers of RBI, SEBI, IRDAI, and PFRDA
  • Faster approvals and reduced compliance

4. Global Access with No FEMA Restrictions

  • No Indian exchange control laws (FEMA) apply within the IFSC
  • Offshore clients and contracts can be serviced seamlessly
  • Ideal for cross-border funds, loans, derivatives, and insurance

5. World-Class Smart City Infrastructure

  • Located in a dedicated SEZ zone with Grade A office spaces
  • Plug-and-play commercial spaces, global connectivity, and 24×7 utility services
  • Close proximity to Ahmedabad International Airport

Who Can Set Up in GIFT City IFSC?

GIFT City IFSC is open to a wide range of international businesses looking to access the Indian and global markets through a tax-efficient, regulation-light environment. Here’s a quick overview of who can set up operations in India’s international financial hub:

Foreign Banks

  • Can establish IFSC Banking Units (IBUs)
  • Offer services like offshore lending, trade finance, and treasury operations
  • Regulated by IFSCA Banking Regulations

Insurance and Reinsurance Companies

  • Can open IFSC Insurance Offices (IIOs) or reinsurance branches
  • Allowed to underwrite cross-border risks and global policies
  • Benefit from capital requirement relaxations and tax exemptions

Fund Managers: AIFs, Mutual Funds & PMS

  • Set up Alternative Investment Funds (AIFs), Mutual Funds, and Portfolio Management Services
  • Enjoy zero capital gains tax, 10-year tax holiday
  • Can raise capital globally and invest in India and abroad

Fintech Firms

  • Eligible to operate under the IFSCA FinTech Sandbox
  • Engage in cross-border payments, digital lending, tokenization, and neo banking
  • Access to Innovation Hub, relaxed net worth norms for startups

Aircraft & Ship Leasing Companies

  • Allowed to lease aircraft, engines, and maritime assets
  • Benefit from zero GST, no withholding tax, and faster depreciation
  • Easy registration with IFSCA + DGCA

Holding Companies & Treasury Units

  • Global companies can set up treasury centers or regional HQs
  • Manage group finances, intercompany loans, hedging, and liquidity
  • Use GIFT IFSC as a global financial control tower

Legal Structures Available to Foreign Companies in GIFT City IFSC

Foreign companies looking to enter India via GIFT City IFSC can choose from a variety of flexible legal structures, each tailored to specific business models and regulatory needs. Here are the key options:

Company (Private/Public Ltd. with ‘IFSC’ suffix)

  • Incorporate a company under the Companies Act, 2013 with “IFSC” in the name
  • Must have a registered office in the GIFT City SEZ
  • Enjoy relaxations under company law: no CSR for 5 years, fewer compliance burdens
  • Suitable for full-scale operations like funds, banks, insurers, fintechs

Most common entry route for foreign investors setting up a new entity

Branch Office

  • Foreign companies with an existing presence can open a branch in GIFT City
  • Treated as a non-resident unit under FEMA
  • No prior RBI approval needed; governed by IFSCA regulations
  • Ideal for banks, insurance offices, and global service units

Efficient structure for expanding global operations into India

LLP (Limited Liability Partnership)

  • Registered under the LLP Act, 2008
  • Offers flexibility with less compliance than a company
  • Can be used by consulting, advisory, and fintech entities
  • Eligible for SEZ benefits and IFSCA registration

Good fit for capital-light or partnership-driven businesses

Foreign Portfolio Investor (FPI) Entities

  • FPIs can register in GIFT City IFSC via SEBI or IFSCA
  • Invest in Indian securities, derivatives, and listed instruments
  • Benefit from tax exemptions on capital gains, stamp duty
  • Can pool funds globally and route them via IFSC

Preferred by institutional investors and hedge funds

Investment Fund Vehicles (AIFs & Mutual Funds)

  • Register as Alternative Investment Funds (Cat I, II, III) or IFSC Mutual Funds
  • Allowed to raise funds from global investors
  • Can invest in India, global markets, or both
  • No GST on management fees, no capital gains tax on offshore investments

Over 198 funds are already operating in GIFT City as of December 2024. (Source: IFSCA)

Step-by-Step Process to Set Up in GIFT City IFSC

Foreign businesses planning to enter India through GIFT City IFSC can follow a streamlined process facilitated by the IFSCA’s single-window clearance system. Here’s a quick step-by-step guide:

1. Present Your Business Use Case

Begin with an in-person or virtual meeting with officials from IFSCA and GIFT City to demonstrate your business model and explain how it aligns with IFSC objectives.

2. Secure Office Space

Identify and finalize office space within the GIFT SEZ area. Sign an agreement with a developer and obtain the Provisional Letter of Allotment (PLOA).

3. Submit Applications

Prepare and submit two parallel applications:

  • SEZ application to the GIFT City Administrator for unit setup approval
  • IFSCA application for business registration or license

4. UAC Hearing

IFSCA will schedule a Unit Approval Committee (UAC) meeting to evaluate your proposal. Be prepared to present your business case and respond to queries.

5. Receive Approvals

Upon approval, the Administrator will issue a Letter of Approval (LOA) for SEZ operations. Simultaneously, IFSCA will provide in-principle registration approval.

6. Fulfill Compliance Requirements

Submit:

  • Bond-cum-LUT to the Administrator
  • Obtain Eligibility Certificate from IFSCA
  • Complete essential registrations: RCMC, IEC, GST, etc.

7. Open Bank Accounts

Set up your Foreign Currency and SNRR (Special Non-Resident Rupee) accounts in GIFT IFSC and obtain final IFSCA approval.

8. Launch Operations

Once all approvals and compliance requirements are fulfilled, you’re ready to kickstart operations from your GIFT IFSC unit.

Key Regulatory Bodies & Licenses Required in GIFT City IFSC

One of the biggest advantages of operating in GIFT City IFSC is the presence of a single unified regulator—IFSCA, which simplifies compliance and speeds up approvals across sectors. Here’s a breakdown of the key licenses required by sector:

SectorRegulatorLicense/Registration Required
BankingIFSCAIFSC Banking Unit (IBU) License
Capital MarketsIFSCABroker/Dealer Registration, Clearing Member License, Market Infrastructure Institution (MII) Registration (for exchanges, clearing corps, depositories)
InsuranceIFSCAIFSC Insurance Office (IIO) Approval / Registration for Insurers, Reinsurers, and Intermediaries
Funds & Asset ManagementIFSCAFund Management Entity (FME) Registration, AIF/MF Scheme Approval, PMS License
Fintech & Payment ServicesIFSCARegulatory Sandbox Registration, Payment System Provider Authorization, Account Issuance / E-Money License
Leasing (Aircraft/Ship)IFSCA + GIFT SEZRegistration as Finance Company/Unit; No Objection/Approval for Aircraft or Ship Leasing Business
Allied ServicesIFSCA/GIFT SEZRegistration under support services (legal, audit, R&D, global in-house centers) as per business activity

Banking: IBU License

Banks—both Indian and foreign—can set up IFSC Banking Units (IBUs) to conduct offshore lending, trade finance, and treasury operations.
No CRR/SLR requirements, full foreign currency operations, and no priority sector norms.

Capital Markets: Broker/Dealer License

Entities participating in international exchanges (India INX, NSE IFSC) need to register as brokers, dealers, or clearing members with IFSCA.
Allowed to trade in global stocks, bonds, derivatives, DRs, and commodities.

Insurance: IIO Approval

Foreign insurers and reinsurers must obtain IFSCA approval to operate as an IFSC Insurance Office (IIO).
Engage in cross-border reinsurance, captive insurance, and global underwriting from India.

Funds: AIF / Mutual Fund Registration

Fund managers can launch:

  • Alternative Investment Funds (AIFs) – Cat I, II, III
  • IFSC Mutual Funds
    Tax-neutral structures, no capital gains tax on offshore investments, and global investor access.

Tax Incentives and Exemptions for Foreign Companies in GIFT City IFSC

GIFT City IFSC offers one of the most lucrative tax regimes in Asia, making it a top destination for foreign companies entering India. Here are the key tax benefits available to businesses operating from the GIFT City SEZ:

Corporate Tax Exemption

  • 100% income tax exemption for any 10 consecutive years out of 15 years
  • Ideal for fund managers, banks, insurers, fintech, etc.

GST: Zero-Rated for SEZ Units

  • No GST on export of services or transactions between SEZ units
  • Input tax credit (ITC) available on eligible inward supplies

Capital Gains Exemption

  • No capital gains tax for non-resident investors investing in specified securities traded on IFSC exchanges in certain scenarios

Customs Duty Waiver

  • No customs duty on import of capital goods, equipment, or raw materials used for authorized operations
  • Includes aircraft, tech infrastructure, servers, etc.

Stamp Duty Exemption

CSR & Audit Relaxation

  • Corporate Social Responsibility (CSR) provisions not applicable for first 5 years
  • Internal audit exemptions for IFSC companies unless mandated by their Articles of Association

Common Challenges and How to Navigate Them in GIFT City IFSC

While GIFT City IFSC offers world-class infrastructure and tax benefits, foreign companies may still face some initial hurdles. Here’s a breakdown of key challenges and how to overcome them:

Perception of GIFT City Being Remote

Challenge: Some global firms perceive GIFT City as less connected compared to hubs like Mumbai, Dubai, or Singapore.
Solution:

  • Opt for co-working spaces and flexible leases
  • Leverage remote onboarding options for teams
  • The ecosystem is rapidly maturing, with top banks, fintechs, and funds already operational

Legal Unfamiliarity

Challenge: Navigating Indian SEZ laws, IFSCA regulations, and company incorporation can seem complex.
Solution:

  • Work with local legal and compliance advisors experienced in IFSC operations
  • Firms like Treelife help with entity setup, licensing, and post-entry compliance

Currency Convertibility Restrictions

Challenge: INR is not freely convertible within IFSC, which may limit domestic interface.
 Solution:

  • Use foreign currency accounts (USD, EUR) permitted under IFSC norms
  • Design FEMA-compliant structures for inward/outward investments

Regulatory Clarity in Newer Sectors

Challenge: Fintechs, digital asset firms, and new-age businesses may face evolving guidelines.
 Solution:

  • Monitor IFSCA’s Innovation Sandbox for regulatory updates
  • Engage in direct consultations with IFSCA for sector-specific clarity

Wrapping Up, GIFT City IFSC is rapidly emerging as a premier destination for foreign companies entering the Indian market, offering a powerful combination of tax incentives, regulatory ease, and access to a growing financial ecosystem. With unified oversight from the IFSCA, world-class infrastructure, and opportunities across banking, funds, insurance, fintech, and leasing, GIFT City enables businesses to operate with global flexibility on Indian soil. Despite initial setup challenges, the long-term benefits make it a strategic choice for foreign investors, multinational corporations, and financial institutions seeking to tap into India’s international financial hub.

What is the IFSCA? Everything You Need to Know

Posted on by Treelife

What is IFSCA? (International Financial Services Centres Authority)

The International Financial Services Centres Authority (IFSCA) is a unified regulatory body established by the Government of India to oversee and develop financial products, services, and institutions in India’s International Financial Services Centres (IFSCs).

IFSCA plays a central role in transforming GIFT City IFSC into a global hub for offshore and cross-border financial transactions. It brings under one roof the regulatory powers that were earlier divided among entities like the RBI, SEBI, IRDAI, and PFRDA.

Date of Establishment

IFSCA was officially established on April 27, 2020, under a special legislation to streamline the regulation of India’s IFSC ecosystem.

Statutory Basis

The authority derives its powers from the International Financial Services Centres Authority Act, 2019, passed by the Indian Parliament. This Act provides the legal framework for IFSCA to function independently and efficiently as a unified regulator.

Headquarters: GIFT City, Gujarat

IFSCA is headquartered in Gujarat International Finance Tec-City (GIFT City), located in Gandhinagar, Gujarat. GIFT City is India’s first operational IFSC and a strategic project aimed at attracting global financial players to India.

Why Was the IFSCA Established?

The International Financial Services Centres Authority (IFSCA) was created to simplify and strengthen the regulatory environment for India’s International Financial Services Centres (IFSCs), especially within GIFT City Gujarat.

Fragmented Regulatory Oversight

Before IFSCA, financial activities in IFSCs were governed by multiple domestic regulators:

  • RBI – for banking operations
  • SEBI – for capital markets
  • IRDAI – for insurance services
  • PFRDA – for pension-related products

This led to overlapping jurisdictions, compliance complexity, and regulatory delays—hindering the ease of doing business in GIFT IFSC.

Need for a Unified Regulator

To resolve these challenges, the Government of India passed the IFSCA Act, 2019, creating a single-window regulator—IFSCA. It now oversees all financial sectors in the IFSC, including:

  • Banking
  • Insurance
  • Capital markets
  • Asset management
  • FinTech

This unified approach allows for faster decision-making, streamlined licensing, and integrated supervision—all under one roof.

Boosting Ease of Doing Business & Global Competitiveness

IFSCA plays a pivotal role in positioning GIFT City IFSC as a competitive alternative to other global financial hubs like Dubai, Singapore, and London. By enabling innovation, offering regulatory clarity, and reducing compliance burden, IFSCA enhances India’s global financial footprint.

Key Functions and Powers of IFSCA

The International Financial Services Centres Authority (IFSCA) serves as the single regulatory body for all financial services in India’s IFSCs, with a special focus on GIFT City IFSC, Gujarat. It not only regulates but also fosters growth, innovation, and global competitiveness in the offshore financial ecosystem.

Here’s a breakdown of IFSCA’s core functions:

FunctionDescription
Regulatory AuthorityIFSCA oversees and regulates activities across banking, insurance, securities markets, asset management, and fintech in IFSCs.
Development RoleEncourages innovation, supports startups, and develops the ecosystem to attract global financial institutions to GIFT City Gujarat.
International CollaborationWorks with foreign regulators and global institutions to align IFSC practices with international standards and best practices.
Dispute ResolutionProvides a dedicated mechanism to resolve financial disputes within IFSCs quickly and transparently, improving trust and ease of doing business.
Licensing AuthorityGrants approvals and licenses to banks, insurers, asset managers, brokers, and other intermediaries operating in GIFT IFSC.

IFSCA’s powers make it a one-stop regulatory gateway for international finance, helping position GIFT City IFSC as a leading offshore financial hub in Asia.

Organizational Structure of IFSCA

​The International Financial Services Centres Authority (IFSCA) is structured to effectively oversee and develop financial services within India’s International Financial Services Centres (IFSCs), particularly at GIFT City, Gujarat.​

Governance Structure

IFSCA’s governance comprises specialized departments, each focusing on distinct financial sectors:​

  • Department of Banking Supervision: Led by Pradeep Deo, this department manages the supervision of IFSC Banking Units (IBUs) and Finance Companies.
  • Department of Capital Markets: Under the leadership of Pradeep Ramakrishnan, it oversees corporate finance, market infrastructure institutions, and investment funds.
  • Department of Insurance and Pension: Headed by K. Mahipal Reddy, responsible for regulating insurance and pension services within IFSCs.​
  • Department of Metals and Commodities: Also led by Pradeep Ramakrishnan, focusing on market development and regulation of commodities trading.​
  • Department of Development: Managed by Dipesh Shah, this department promotes the development of financial markets and international affairs.​
  • Department of General Administration: Overseen by Praveen Trivedi, handling administration, human resources, and finance.​
  • Department of Technology: Led by Joseph Joshy C J, focusing on information technology and fintech initiatives.
  • Department of Policy and Legal Affairs: Also under Praveen Trivedi, addressing legal policies and investor protection.
  • Department of Regulatory Policy and Regulatory Affairs: Responsible for regulatory cooperation and risk-based supervision.

Each department contains divisions dedicated to specific functions, ensuring comprehensive oversight and development within their respective domains. ​

Chairperson and Members

The authority is led by a Chairperson appointed by the Government of India, supported by members representing various financial sectors. As of August 1, 2023, Shri K. Rajaraman has assumed the role of Chairperson. With nearly 35 years in various leadership roles within the Government of India and the Government of Tamil Nadu, his prior position was as Secretary to the Government of India in the Department of Telecommunications.

Under Shri K. Rajaraman’s leadership, IFSCA continues to enhance the regulatory framework, fostering innovation and global competitiveness within GIFT City IFSC.

Where is IFSCA Located? The Role of GIFT City IFSC

The International Financial Services Centres Authority (IFSCA) is headquartered in GIFT City, Gujarat—India’s first operational International Financial Services Centre (IFSC). Strategically developed to compete with global financial hubs, GIFT City plays a pivotal role in India’s international finance ambitions.

Overview of GIFT City Gujarat

Gujarat International Finance Tec-City (GIFT City) is a state-of-the-art financial and smart city project located between Ahmedabad and Gandhinagar. Spread over 886 acres, it integrates commercial, residential, and recreational zones with world-class urban planning.

Designed around the “walk-to-work” concept, GIFT City offers a seamless ecosystem for global financial institutions, tech companies, and professionals. It is India’s answer to international financial hubs like Dubai, Singapore, and London.

Why GIFT City Was Chosen as India’s First IFSC

India selected GIFT City to host its first International Financial Services Centre due to its strategic location, advanced infrastructure, and supportive regulatory environment.

Key Reasons:

  • Proximity to major cities: Located close to both Ahmedabad (business hub) and Gandhinagar (administrative capital).
  • Integrated smart city model: Combines housing, business, and lifestyle amenities in one location.
  • Special Economic Zone (SEZ) benefits: Offers a globally competitive environment with relaxed regulations.

Strategic Advantages of GIFT City IFSC

Setting up within GIFT City IFSC comes with multiple benefits for global businesses, investors, and fintech innovators:

1. Attractive Tax Incentives

  • 100% income tax exemption for any 10 out of 15 years
  • No GST on specific financial services
  • Exemptions from securities transaction tax and commodity transaction tax

2. World-Class Infrastructure

  • 24×7 power supply and advanced utilities
  • High-speed connectivity and smart building systems
  • Environmentally sustainable urban design

3. Regulatory Ease and Unified Compliance

  • Single-window regulatory approval by IFSCA
  • Simplified licensing for banks, insurers, capital market intermediaries, fintech, startups, etc.
  • Faster operational setup and lower compliance burden

By establishing its headquarters in GIFT City Gujarat, IFSCA is positioned at the heart of India’s growing international finance ecosystem—empowering GIFT City IFSC to become a globally recognized destination for cross-border finance and innovation.

IFSCA Regulations and Regulatory Framework

The International Financial Services Centres Authority (IFSCA) plays a pivotal role in building a transparent, innovation-driven, and globally competitive regulatory environment within GIFT City IFSC, Gujarat. Since its establishment, IFSCA has issued several sector-specific regulations to promote seamless cross-border finance and attract global institutions.

Sectors Eligible to Operate in GIFT IFSC

GIFT City’s IFSC is India’s gateway for global financial services, enabling a host of entities to operate with regulatory ease and global competitiveness. Below are the core sectors permitted to set up within the IFSC:

1. Banking Institutions

Indian and international banks can establish offshore units to provide a wide range of foreign currency banking services.

2. Insurance Players

Life and general insurers, reinsurers, and licensed intermediaries—both domestic and foreign—can offer insurance solutions for international clients from GIFT IFSC.

3. Investment & Fund Management

Fund managers, AIFs, wealth managers, pension funds, custodians, and trustees can register and manage global capital from the IFSC.

4. Securities & Capital Market Infrastructure

Entities like stock exchanges, brokers, depositories, clearing corporations, and bullion market members can establish operations under the IFSC regulatory regime.

5. Digital & Cross-Border Payment Services

Authorized players can offer e-money issuance, escrow services, merchant acquiring, and cross-border remittance solutions with regulatory clarity and global reach.

6. Enabling & Ancillary Services

The IFSC also welcomes global in-house centers, aircraft and ship leasing companies, fintech labs, law and consultancy firms, auditors, academic institutions, and R&D setups.

Major Reforms Under IFSCA

IFSCA Banking Regulation, 2020

This was one of the first comprehensive regulations rolled out by the Authority. It provides a legal framework for:

  • Setting up and operating IFSC Banking Units (IBUs)
  • Foreign currency lending and deposits
  • Cross-border trade finance
  • Client confidentiality and risk management

These regulations position GIFT IFSC as a preferred offshore banking destination for global banks and corporate treasury operations.

IFSCA (Issuance and Listing of Securities) Regulation, 2021

The IFSCA (Issuance and Listing of Securities) Regulations, 2021 streamline and unify the framework for issuing and listing securities on IFSC-based exchanges such as India INX and NSE IFSC.

Key Features:

  • Direct Listing of Indian and Foreign Companies: Indian public companies, REITs, and InvITs can now directly list their securities on IFSC exchanges without the need for overseas listing vehicles.
  • Framework for Debt and Depository Instruments: Enables listing of bonds, non-convertible debentures, and depositary receipts in a simplified manner.
  • Foreign Issuer Access: Regulatory clarity has been extended to foreign companies and institutional investors, improving access to Indian capital markets via the IFSC route.

Why It Matters:

This regulatory update has unlocked new capital-raising opportunities for both Indian and global players while strengthening GIFT IFSC’s role as an international listing hub—bringing it closer to becoming a regional rival to established financial centers like Singapore and Dubai.

What Makes IFSCA Unique?

The International Financial Services Centres Authority (IFSCA) is unlike any other regulator in India’s financial ecosystem. Designed to support GIFT City IFSC, it brings together diverse regulatory functions under a single authority—something never done before in the country.

India’s First Unified Financial Regulator

IFSCA marks the first time India has created a single regulator to oversee multiple sectors—banking, insurance, capital markets, asset management, and fintech—exclusively within International Financial Services Centres.

Previously, institutions in IFSCs had to interact with multiple regulators like RBI, SEBI, IRDAI, and PFRDA. IFSCA eliminates this fragmentation, offering a one-stop regulatory framework that enhances ease of doing business in GIFT City Gujarat.

A Catalyst for FinTech Innovation

One of IFSCA’s standout features is its Regulatory Sandbox, which enables startups and financial innovators to test new technologies and business models in a live environment with controlled risks.

This sandbox approach promotes the development of:

  • Blockchain-based solutions
  • Cross-border payment systems
  • Digital wealth platforms
  • Tokenized assets and digital lending models

With a focus on emerging tech, IFSCA is helping GIFT City IFSC evolve into a global FinTech hub.

Enabling Global Capital Raising in India

IFSCA has created a favorable ecosystem for foreign and domestic entities to raise capital from international investors via the IFSC stock exchanges—namely India INX and NSE IFSC.

With its progressive regulations, IFSCA allows:

  • Direct listing of Indian and foreign companies
  • Issuance of foreign currency bonds, REITs, and depository receipts
  • Participation by Qualified Foreign Investors (QFIs) and institutional players

This is a game-changer for India’s capital markets and positions GIFT City IFSC as a competitive platform for global fundraising.

Sectors and Entities Regulated by IFSCA

The International Financial Services Centres Authority (IFSCA) serves as the single-point regulator for a wide range of financial services within GIFT City IFSC, Gujarat. Its mandate spans across multiple verticals, ensuring a well-regulated, globally aligned, and innovation-friendly ecosystem for international finance.

Sectors and Entities Regulated by IFSCA

The IFSCA acts as the unified regulator for financial activities within GIFT City IFSC, Gujarat. With its progressive and globally benchmarked framework, IFSCA oversees a broad range of financial and allied services aimed at creating a vibrant international financial ecosystem.

Financial Sectors Under IFSCA’s Regulatory Scope

1. Banking Units

  • Regulates IFSC Banking Units (IBUs) offering offshore banking in foreign currency
  • Enables services like cross-border lending, trade finance, and treasury operations
  • Permits opening of Foreign Currency Accounts under LRS

2. Insurance and Reinsurance

  • Licenses direct insurers, reinsurers, and intermediaries
  • Enables retail offerings including health, life, education, and travel insurance for NRIs
  • Supports global risk capacity and insurance innovation

3. Capital Market Intermediaries

  • Supervises brokers, exchanges, clearing corporations, and depositories
  • Enables trading in debt, equity, ETFs, ESG instruments, and derivatives
  • Permits listing of Commercial Paper and Certificates of Deposit

4. Asset Management and Fund Entities

  • Regulates AIFs, mutual funds, VC & angel schemes, and FMEs
  • Recent update: 198 registered fund schemes, including Category I, II, III AIFs
  • Allows relocation of offshore schemes to GIFT IFSC
  • Retail mutual funds, ETFs, and ESG funds also now included

5. Aircraft & Ship Leasing

  • Facilitates global aircraft leasing including sale and leaseback models
  • As of Dec 2024: 196 aviation assets leased; ship leasing units also operational
  • Guidelines issued for sharing manpower and infrastructure among leasing entities

6. Payment & Settlement Services

  • Allows cross-border digital payments, e-money issuance, escrow services
  • Regulates PSPs under IFSCA (Payment and Settlement Systems) Regulations, 2024

7. Bullion Exchange (IIBX)

  • Enables spot trading of gold and silver through India International Bullion Exchange
  • 33 qualified suppliers and 153 jewellers onboarded as of Dec 2024

8. FinTech and Digital Platforms

  • Regulatory sandbox for startups
  • FinTech entities offering robo-advisory, AI-based trading, blockchain solutions, etc.

9. Trade Finance Platforms (ITFS)

  • IBUs and NBFCs can engage in factoring, forfaiting, bill discounting, and supply chain finance
  • Expanded to include secondary market transactions

10. Education & Research Institutions

  • IFSCA now permits foreign universities and training institutes to set up within IFSC to support financial education, research, and certification

11. Ancillary & Professional Services

  • Includes law firms, accounting firms, rating agencies, compliance advisory, and ESG certifiers
  • ESG data product providers and credit rating agencies governed under specific frameworks

How Does IFSCA Attract Global Participation?

The International Financial Services Centres Authority (IFSCA) has created a globally competitive environment at GIFT City IFSC, Gujarat, to attract foreign investors, multinational financial institutions, fintech innovators, and global banks. Through a combination of regulatory clarity, tax benefits, and investor-friendly policies, IFSCA is helping position India as a preferred destination for international finance.

1. Tax Neutrality and Business Incentives

One of the biggest draws for global entities is the favorable tax regime offered under the IFSCA framework:

  • 100% income tax exemption for any 10 consecutive years out of a 15-year block for IFSC units
  • GST exemptions on services rendered within IFSC and to overseas clients

These incentives make GIFT City IFSC a tax-efficient base for global operations.

2. Ease of Capital Movement and Repatriation

IFSCA regulations allow for free movement of capital, making it easy for foreign investors to bring in and take out funds without typical regulatory bottlenecks:

  • No restrictions on foreign currency remittances
  • Simple procedures for profit repatriation, dividend distribution, and capital exit

This ease of movement enhances the confidence of institutional investors and multinational firms.

3. No Currency Risk Due to USD Transactions

Entities operating in GIFT City IFSC conduct transactions primarily in freely convertible foreign currencies, including USD, EUR, and GBP:

  • Eliminates currency conversion risks common in domestic transactions
  • Enables hedging, forex trading, and offshore financing in globally accepted currencies
  • Ideal for multinational businesses, treasury operations, and NRI investment platforms

This foreign currency flexibility significantly boosts the IFSC’s appeal for cross-border financial activity.

4. Cross-Border Dispute Resolution Mechanisms

IFSCA has built-in mechanisms for efficient dispute resolution in line with global best practices:

  • Access to International Arbitration Centres
  • Fast-track settlement processes for cross-border disputes
  • Regulatory clarity that reduces legal friction and investor uncertainty

This ensures a transparent, trustworthy, and predictable business environment—key for global players evaluating India as a long-term financial hub.

How IFSCA Impacts India’s Global Financial Position

The International Financial Services Centres Authority (IFSCA) is playing a transformative role in elevating India’s global financial position by developing GIFT City IFSC into a world-class international finance hub. With unified regulation, global investor-friendly policies, and seamless cross-border access, IFSCA positions India alongside major financial centers like Singapore, Dubai, and London. Its focus on capital market development, fintech innovation, and international collaborations is not only attracting global institutions but also enabling India to emerge as a competitive player in offshore finance, trade, and investment flows—firmly placing GIFT City Gujarat on the map of leading financial ecosystems worldwide.

GIFT City vs Dubai DIFC vs Singapore: Which One is Best for Your Business?

Posted on by Treelife

When expanding globally, choosing the right financial hub is crucial for success. The three prominent financial centers—GIFT City (India), Dubai International Financial Centre (DIFC), and Singapore—each offer unique benefits to businesses.

  • GIFT City is India’s first International Financial Services Centre (IFSC), providing tax exemptions, cost-effective operations, and access to India’s rapidly growing market. It’s ideal for sectors like fintech, banking, and insurance.
  • Dubai International Financial Centre (DIFC) offers a tax-free environment, minimal bureaucracy, and serves as a gateway to the Middle East, Africa, and Asia. It’s well-suited for businesses in real estate, logistics, and trade.
  • Singapore is a global financial hub known for its stable economy, low corporate taxes, and strategic location in Southeast Asia, making it perfect for banking, investment, and insurance firms.

Importance of Choosing the Right Financial Center

Selecting the right hub depends on your target market, tax incentives, and business needs. Whether it’s GIFT City’s emerging market access, Dubai’s strategic location, or Singapore’s established infrastructure, the right choice can significantly impact your business’s global success.

What is GIFT City?

GIFT City (Gujarat International Finance Tec-City) is India’s first International Financial Services Centre (IFSC), located in the state of Gujarat. It is an ambitious project designed to establish India as a global financial hub, offering businesses a world-class environment with tax incentives and cutting-edge infrastructure. GIFT City is strategically positioned to attract global financial services companies, providing them with the tools they need to operate efficiently and competitively on the world stage.

Key Advantages for Businesses

  1. Tax Exemptions: One of the most compelling reasons to set up operations in GIFT City is the tax benefits. Companies operating in GIFT City enjoy 100% tax exemptions for up to 10 years, making it a highly cost-effective option for businesses, particularly those in financial services.
  2. Regulatory Framework: GIFT City offers a simplified, investor-friendly regulatory framework that makes it easier to set up and run a business. The International Financial Services Centres Authority (IFSCA) oversees the regulation of businesses, ensuring compliance with global standards while maintaining flexibility to meet local needs.
  3. State-of-the-Art Infrastructure: GIFT City is equipped with world-class infrastructure, including advanced IT systems, high-speed connectivity, and top-tier office spaces. The city also boasts modern amenities, a skilled workforce, and robust transportation networks, which are critical for businesses looking to thrive in a global environment.
  4. Government Incentives: The Indian government has committed to making GIFT City a world-class financial hub by offering numerous incentives, including tax holidays, low-cost financing options, and support for startups in financial technologies and related fields.

Focus on Key Sectors

GIFT IFSC offers a wide range of opportunities for financial institutions, fintechs, and allied service providers. Here are the major sectors permitted to set up operations:

1. Banking

Both Indian and foreign banks can operate, offering offshore banking services in foreign currency under a liberalised regulatory framework.

2. Insurance

Insurers, reinsurers, and intermediaries—both Indian and international—can offer life, general, and composite insurance services tailored for global markets.

3. Asset Management

Entities like Alternate Investment Funds (AIFs), Portfolio Managers, Wealth Managers, Pension Funds, and Fund Management Entities (FMEs) can domicile and operate from GIFT IFSC.

4. Capital Markets

A full spectrum of market infrastructure is allowed—stock exchanges, brokers, depositories, clearing corporations, and bullion trading members can function under IFSC norms.

5. Payment Services

Services such as cross-border remittances, e-money issuance, merchant acquisition, escrow, and account opening are permitted, facilitating global fintech operations.

6. Allied/Support Services

Global capability centers, aircraft and ship leasing, legal and consultancy firms, fintech hubs, audit/accounting services, R&D units, and educational institutions can establish a presence to support core financial activities.

Dubai International Financial Centre (DIFC): A Growing Financial Hub

DIFC is a critical component of Dubai’s ambition to become a leading global financial hub. Positioned in the heart of the UAE, Dubai offers a unique combination of business-friendly regulations, tax incentives, and world-class infrastructure, making it an ideal destination for companies seeking access to international markets.

Key Features of Dubai as a Global Financial Center

  1. Tax-Free Zones: Dubai’s tax-free zones are one of the most attractive features for businesses operating within Dubai. Companies in these zones benefit from zero personal income tax, zero corporate tax, and no value-added tax (VAT) on most goods and services. These tax incentives significantly reduce operational costs, making it an appealing destination for multinational companies.
  2. Business-Friendly Regulations: Dubai operates under a streamlined regulatory framework that makes it easier for businesses to set up and run. The Dubai International Financial Centre (DIFC) offers a well-established legal system, based on common law, that is aligned with international standards. This ensures a stable and transparent environment for businesses to operate while also offering flexibility for startups and growing companies.

Major Benefits for Businesses

  1. Access to Global Markets: Dubai’s strategic location between Europe, Asia, and Africa provides businesses with unparalleled access to global markets. It is a gateway to the Middle East and North Africa (MENA) region, making it an ideal hub for companies looking to tap into emerging markets in the region. Additionally, Dubai’s status as an international trade and financial center means that businesses can easily connect with partners, investors, and clients worldwide.
  2. Networking Opportunities: Dubai is home to a large, diverse community of international businesses, financial institutions, and investors, making it an ideal location for networking and business development. The presence of global companies, as well as industry-specific events and conferences, provides ample opportunities for companies to connect, collaborate, and expand their reach.
  3. World-Class Infrastructure: Dubai is renowned for its state-of-the-art infrastructure, including world-class office spaces, advanced technology, and top-tier transport facilities. Dubai benefits from this infrastructure, providing businesses with modern office spaces, high-speed internet, and efficient logistics. The city is also home to Dubai International Airport, one of the busiest international airports globally, offering easy access to business leaders and professionals from around the world.

Singapore: The Premier Financial Hub in Asia

Singapore has long been recognized as one of the world’s leading financial hubs, offering a stable and thriving environment for international businesses. As a global financial center, Singapore attracts companies from all over the world, especially in the banking, investment, insurance, and financial services sectors. Known for its strong regulatory framework and world-class infrastructure, Singapore continues to be a top choice for businesses looking to expand in Asia and beyond.

Strong Regulatory Environment

Singapore’s regulatory environment is one of the key factors that has contributed to its success as a financial hub. The country’s Monetary Authority of Singapore (MAS) ensures that the financial system remains stable, transparent, and in line with global standards. Businesses operating in Singapore benefit from a legal system based on English common law, providing clarity and predictability in business dealings. This high level of regulation fosters investor confidence, making Singapore an attractive location for international companies seeking a secure and reliable financial environment.

Global Business Connectivity

Singapore’s global business connectivity is another major reason why it remains a top financial hub. Located at the crossroads of Asia-Pacific, Singapore provides businesses with easy access to key markets in Southeast Asia, China, and India. The country’s strong network of trade agreements, including free trade agreements (FTAs) with major economies, allows businesses to operate seamlessly across borders, facilitating regional and global trade.

The Singapore Exchange (SGX) is also a significant asset, offering companies the opportunity to list and raise capital. Singapore’s connectivity is further enhanced by its advanced transportation and logistics infrastructure, including Changi Airport, one of the busiest international airports in the world.

Key Advantages for International Businesses

  1. Tax Policies: One of the standout features of Singapore as a financial hub is its favorable tax policies. The country offers one of the most competitive corporate tax rates in the region, capped at 17%, with tax incentives available for certain industries and activities, such as startups, research and development, and fintech. Additionally, Singapore has a network of double tax treaties with over 80 countries, which helps businesses avoid double taxation and promotes cross-border investments.
  2. Strategic Location: Singapore’s strategic location makes it an ideal base for companies looking to access the rapidly growing Asia-Pacific region. It is a gateway to ASEAN, as well as a key link for trade between the East and West. Businesses in Singapore can tap into one of the world’s most dynamic and diverse markets, offering abundant opportunities for growth and expansion.
  3. Robust Financial Services Ecosystem: Singapore boasts a robust financial services ecosystem that supports businesses in banking, investment, asset management, and insurance. The country is home to numerous global banks, financial institutions, and insurance companies, making it an attractive destination for international firms looking for a strong and interconnected financial system. Singapore also leads in emerging financial technologies, such as blockchain, cryptocurrencies, and digital payments, positioning itself as a key player in the future of global finance.

GIFT City vs DIFC vs Singapore: Key Comparisons

When choosing the right financial hub for your business, tax benefits, ease of doing business, and sector-specific advantages are key considerations. Here’s a quick breakdown of how GIFT City, DIFC, and Singapore compare across these essential factors.

Comparison Table of Difference between GIFT City, DIFC and Singapore

FeatureGIFT CityDIFCSingapore
Tax Exemptions100% for up to 10 years0% for qualifying income from Free Trade Zones, no personal taxAttractive tax rates, double taxation treaties
Operational CostsLowModerateHigh
GST ExemptionsNo GST on financial services provided to IFSC entitiesNo GST on most servicesGST exemptions for qualifying services

Tax Benefits & Incentives

  1. GIFT City:
    • Tax Exemptions: GIFT City offers 100% tax exemptions for up to 10 years, making it an incredibly cost-effective choice for businesses. This provides a strong incentive for companies in sectors like fintech, insurance, and banking.
    • Operational Costs: Lower operational costs in GIFT City make it an attractive destination for startups and international firms looking to operate in India’s growing market.
  2. Dubai:
    • Tax-Free Zones: Dubai provides tax-free zones, which include no corporate tax and no personal income tax for companies operating within the zones. This makes Dubai one of the most tax-efficient locations for international businesses.
    • Tax Exemptions: International firms can benefit from additional tax exemptions, including exemptions on profits and income derived from activities in the Dubai International Financial Centre (DIFC).
  3. Singapore:
    • Tax Rates: Singapore offers attractive tax rates, with a corporate tax rate of 17%—one of the lowest in Asia. Additionally, businesses can enjoy tax incentives such as reduced tax rates for certain qualifying activities and industries.
    • Double Taxation Treaties: Singapore has a network of over 80 double taxation treaties, allowing businesses to avoid double taxation and benefit from lower tax rates on foreign income.
    • GST Exemptions: Certain services in Singapore, such as financial services, benefit from GST exemptions, making it a favorable environment for companies in the finance sector.

Ease of Doing Business

  1. GIFT City:
    • Simplified Regulations: GIFT City offers a simplified regulatory framework, which reduces bureaucracy and compliance costs. It is designed to support global businesses, particularly in sectors like fintech, banking, and insurance.
    • Compliance Costs: The regulatory framework is designed to be cost-effective, making it an ideal location for businesses looking to minimize their compliance burden while accessing the Indian market.
  2. Dubai:
    • Quick Setup: The process of setting up a business in Dubai is quick, with minimal bureaucracy and efficiency in registration. Dubai’s infrastructure and business-friendly environment make it easy for international businesses to enter and operate.
    • Business-Friendly: Dubai’s low regulatory friction and efficient setup process make it ideal for businesses that need to get up and running quickly.
  3. Singapore:
    • World-Class Business Environment: Singapore boasts a world-class ease of doing business and consistently ranks high on global business indices. However, the operational complexity and costs can be higher compared to GIFT City and Dubai, particularly for startups or smaller companies.
    • Regulatory Requirements: Singapore’s regulatory system is well-established but can be more complex and demanding compared to other financial hubs, which may require businesses to navigate additional layers of compliance.

Sector-Specific Benefits

  1. GIFT City:
    • Ideal for Fintech and Emerging Sectors: GIFT City is particularly well-suited for fintech, aviation leasing, and insurance sectors. The city provides tax incentives and a growing infrastructure that aligns with India’s emerging financial markets.
    • Indian Market Access: Businesses in GIFT City benefit from direct access to the Indian market, which offers a rapidly expanding consumer base and a growing digital economy.
  2. Dubai:
    • Multi-National Businesses: Dubai is perfect for multi-national corporations (MNCs) looking to establish a foothold in the Middle East, Africa, and Asia. It offers a favorable environment for businesses in logistics, real estate, and trade.
    • Trade and Logistics Hub: Dubai’s strategic location as a global trading hub provides substantial opportunities for companies involved in international logistics and supply chain management.
  3. Singapore:
    • Strong in Banking and Financial Services: Singapore remains a premier destination for banking, asset management, and financial services. The city’s highly developed financial ecosystem, along with its excellent connectivity, makes it a preferred choice for businesses in the finance sector.
    • Regional Headquarters for MNCs: Many global multinational corporations (MNCs) use Singapore as their regional headquarters for operations in Southeast Asia and the Asia-Pacific region.

When comparing GIFT City, Dubai, and Singapore, businesses must consider the tax benefits, ease of doing business, and sector-specific advantages each financial hub offers.

  • GIFT City stands out for its low operational costs, tax exemptions, and its focus on emerging sectors like Funds, fintech, ship leasing and aviation leasing.
  • Dubai offers tax-free zones, quick setup, and a strong position as a hub for multi-national companies and logistics businesses.
  • Singapore provides a robust financial ecosystem, attractive tax policies, and strategic access to Southeast Asia, particularly for businesses in banking and financial services.

GIFT City vs Dubai vs Singapore: Cost of Business Operations

When evaluating GIFT City, Dubai, and Singapore for setting up your business, understanding the cost of operations is critical. Each financial hub presents a unique cost structure that can significantly impact your company’s budget and profitability. Here’s a look at the key cost factors involved in setting up and operating a business in each location.

Cost Factors to Consider

  1. Setup Costs:
    • GIFT City: Setting up a business in GIFT City typically involves one-time registration and legal costs, which are relatively low compared to mature markets. Businesses in GIFT City also benefit from streamlined regulatory processes, reducing consultancy costs and making the overall setup process more cost-effective.
    • Dubai: The setup costs in Dubai are moderate. While the registration process is quick and efficient, businesses may need to budget for additional consultancy fees, especially for firms that are unfamiliar with UAE’s legal and regulatory environment. However, the tax-free zones provide substantial savings in the long run.
    • Singapore: The setup costs in Singapore can be higher, particularly for businesses requiring specialized licenses or permits. Legal and consultancy costs are relatively high, as businesses must navigate a well-established but detailed regulatory system. However, Singapore’s infrastructure and global connectivity often offset these initial costs for larger enterprises.
  2. Ongoing Costs:
    • GIFT City: Operational costs in GIFT City are lower compared to more established financial hubs like Singapore and Dubai. This is due to favorable financial regulations, lower office space rental costs, and a cost-effective labor market. Additionally, companies benefit from tax exemptions, which reduce the ongoing tax outflow.
    • Dubai: While Dubai offers tax-free zones and no personal income tax, the ongoing operational costs tend to be moderate. Office space rents in Dubai can be higher than in GIFT City, and businesses may face staffing costs associated with hiring skilled professionals in the city’s competitive labor market. However, the benefits of tax-free incentives make Dubai attractive for larger firms.
    • Singapore: Singapore has high ongoing costs, particularly for office space and staffing. Due to the mature infrastructure and high living standards, labor costs in Singapore are also among the highest in the region. Additionally, businesses face compliance costs due to the country’s stringent regulatory environment. However, these costs are offset by the high quality of infrastructure and a skilled labor force, making it an appealing choice for multinational companies.

Comparison Bullet Points:

  • GIFT City:
    • Lower operational costs due to favorable regulations and tax exemptions.
    • Affordable office space and a growing talent pool.
    • Ideal for businesses looking to minimize costs while tapping into the growing Indian market.
  • Dubai:
    • Moderate operational costs with higher costs for office space and staffing.
    • Tax-free zones and no personal income tax make it highly attractive for larger firms.
    • Ideal for businesses looking for regional access to Middle Eastern and African markets.
  • Singapore:
    • High operational costs, particularly for office space and skilled labor.
    • High compliance and consultancy costs due to the mature and complex regulatory system.
    • Best suited for businesses seeking global connectivity and financial services expertise in Southeast Asia.

Future Growth Potential: GIFT City vs Dubai vs Singapore

When considering the future growth potential of GIFT City, Dubai, and Singapore, each location offers distinct opportunities depending on your business goals and target markets.

Market Access & Growth Opportunities

  1. GIFT City:
    • Emerging Hub: GIFT City is rapidly evolving as a major financial services hub in India. With India’s growing economy, GIFT City is positioning itself to attract multinational companies seeking access to one of the world’s largest and fastest-growing markets. The city is expanding its infrastructure and regulatory frameworks to support sectors like fintech, banking, and insurance, creating ample opportunities for businesses in these industries.
  2. Dubai:
    • Gateway to the Middle East & Africa: Dubai serves as a vital gateway to Middle Eastern and African markets, with its strategic location bridging Europe, Asia, and Africa. The city’s strong infrastructure, tax advantages, and business-friendly environment make it an ideal base for companies aiming to expand in the region, particularly in sectors like logistics, finance, and real estate.
  3. Singapore:
    • Mature Financial Powerhouse: As one of Asia’s premier financial centers, Singapore is already a mature market with established growth. The city continues to attract global businesses thanks to its robust regulatory environment, high-quality infrastructure, and access to the Asia-Pacific market. Singapore remains a top choice for banking, investment, and financial services companies, ensuring consistent growth and innovation.

How to Set Up Your Business in GIFT City, Dubai, and Singapore

Setting up a business in GIFT City, Dubai, or Singapore involves specific steps depending on the location. Here’s a simple guide for each financial hub:

1. GIFT City: Setting Up Your Business in India’s First IFSC

  • Company Registration: Begin by registering your company with the GIFT City IFSC Authority. You will need to choose the appropriate business structure (e.g., private limited company, partnership).
  • Sector-Specific Licenses: Depending on your industry (e.g., fintech, banking, or insurance), you will need to apply for the necessary sector-specific licenses.
  • Compliance Steps: Ensure compliance with Indian regulatory requirements, including GST registration, Income tax, and other industry-specific norms.

2. Dubai: Setting Up a Business in Dubai’s Free Zones

  • Establishing Your Business: Choose one of Dubai’s free zones, such as the Dubai International Financial Centre (DIFC), which provides a streamlined process for international businesses.
  • Documentation: Prepare necessary documentation, including a business plan, proof of identity, and business licenses. Ensure compliance with Dubai’s Department of Economic Development (DED) regulations.
  • Regulatory Requirements: Complete the registration with Dubai Financial Services Authority (DFSA) or other relevant authorities, depending on your sector (e.g., financial services, real estate).

3. Singapore: Business Setup in Asia’s Financial Powerhouse

  • Business Registration Process: Register your company with the Accounting and Corporate Regulatory Authority (ACRA). Singapore allows both local and foreign businesses to register easily online.
  • Required Permits: Apply for industry-specific permits (e.g., financial services licenses from the Monetary Authority of Singapore). Permits are required for sectors such as banking, insurance, and fintech.
  • Compliance with Local Laws: Ensure compliance with Singapore’s stringent tax laws, labor regulations, and corporate governance standards.

Important Considerations

When choosing where to set up your business, consider the following factors:

  • Tax Advantages: GIFT City offers extensive tax exemptions, Dubai provides tax-free zones, and Singapore offers competitive tax rates with incentives for financial services.
  • Ease of Access to Markets: GIFT City gives access to India’s growing market, Dubai provides strategic access to the Middle East and Africa, while Singapore offers a gateway to Southeast Asia and global markets.
  • Industry-Specific Incentives: Consider sector-specific benefits, such as fintech support in GIFT City, logistics and real estate incentives in Dubai, and banking and financial services advantages in Singapore.

Choose the location that best aligns with your business goals, target markets, and industry needs.

Choosing the right financial hub for your business is crucial for long-term success, and the decision between GIFT City, Dubai, and Singapore depends on factors like tax incentives, market access, and sector-specific benefits. GIFT City offers emerging opportunities with its tax exemptions and access to India’s growing market, making it ideal for businesses in fintech, insurance, and banking. Dubai stands out with its tax-free zones and strategic location as a gateway to Middle Eastern and African markets, while Singapore remains a mature financial powerhouse offering global connectivity and a stable regulatory environment for banking and financial services. 

GIFT IFSC Licensing Process: Step-by-Step Legal Guide (2025 Edition)

Posted on by Treelife

What is GIFT City and Why is It Important?

GIFT City, short for Gujarat International Finance Tec-City, is India’s first operational International Financial Services Centre (IFSC), located in Gandhinagar, Gujarat. It was built to rival global financial hubs like Singapore and Dubai, offering a world-class ecosystem for financial and professional services.

Governed by IFSCA – India’s Unified Financial Regulator

GIFT City IFSC is regulated by the International Financial Services Centres Authority (IFSCA), which serves as a single-window regulator for all financial activities banking, capital markets, insurance, fintech, and more, streamlining compliance and approvals.

SEZ vs DTA: The Two Zones Within GIFT City

GIFT City is divided into two parts:

  • SEZ (Special Economic Zone) – For export-oriented units eligible for tax benefits
  • DTA (Domestic Tariff Area) – For serving Indian domestic clients, without SEZ incentives
    Choosing the right zone is crucial based on your business model and target market.

Who Can Set Up in GIFT IFSC?

Entities across a wide range of financial and allied sectors are permitted to establish operations in GIFT IFSC. These include:

1. Banking

  • Indian banks
  • Foreign banks

2. Insurance

  • Indian & Foreign Insurers
  • Indian & Foreign Reinsurers
  • Indian & Foreign Intermediaries

3. Asset Management

  • Pension Fund Services
  • Alternate Investment Funds (AIFs)
  • Investment Advisers
  • Wealth Management
  • Portfolio Managers
  • Custodial Services
  • Trust Services
  • Fund Management Entities (FMEs)

4. Capital Markets

  • Stock/Commodity Exchanges
  • Clearing Corporations
  • Depositories
  • Brokers
  • Registrar/Share Transfer Agents
  • Bullion Trading Members and Clearing Members

5. Payment Services

  • Account issuance services (including e-money account issuance)
  • E-money issuance services
  • Escrow services
  • Cross-border money transfer services
  • Merchant acquisition services

6. Allied/Support Services

  • Global in-house centres
  • Aircraft Leasing & Financing
  • Ship Leasing
  • FinTech Hub
  • Accounting & Audit Services
  • Legal & Consultancy Services
  • Educational Institutions
  • R&D Services

Note: This is a concise list for easier presentation purposes.

Pre-Licensing Considerations

Before applying for a GIFT City license, it’s essential to understand the eligibility criteria, setup options, and tax benefits available.

Who Can Apply?

Entities eligible to set up operations in GIFT IFSC include:

  • Indian companies and LLPs
  • Foreign companies setting up branches or subsidiaries
  • Banks, NBFCs, insurers, fintechs, and fund managers

GIFT IFSC welcomes both startups and global institutions under the unified IFSCA framework.

Minimum Capital Requirements

Capital norms vary based on the regulation under which registration is sought. For instance, FME (Non-retail) are required to have a minimum net worth of USD 500,000, aircraft leasing / ship leasing players intending to do operating lease activities are required to have net worth of USD 0.2 million. Check IFSCA regulations for your specific sector.

Office Space Options

All businesses must lease commercial space within GIFT City.

  • Plug-and-play offices – Quick and cost-effective for startups
  • Custom-built units – Ideal for larger enterprises needing long-term setups

SEZ vs DTA – What to Choose?

  • SEZ Zone: For IFSC related activities; offers tax incentives and duty-free imports
  • DTA Zone: For businesses serving domestic Indian clients and exploring benefits under Gujarat state’s IT/ITeS policy / GCC Policy.

Key Tax Benefits in GIFT IFSC

  • 100% income tax exemption for 10 consecutive years out of 15 years
  • No GST on services exported from SEZ units
  • No securities transaction tax, commodity transaction tax and other transaction charges
  • No stamp duty on certain transactions

GIFT IFSC offers one of the most attractive tax regimes in India for global-facing businesses.

Step-by-StepProcess for setting up operations in IFSC

Setting up a business in GIFT IFSC is governed by a clear and structured process involving both the International Financial Services Centres Authority (IFSCA) and the SEZ Administrator. Here’s how the journey typically unfolds:

A. Preliminary Steps: Business Use Case & Office Space

Before initiating incorporation, companies must:

  1. Engage with IFSCA/GIFT Officials
     Schedule an in-person or virtual meeting to present the business use case and understand regulatory expectations.
  2. Secure Office Space in GIFT SEZ
    • Identify suitable commercial space (plug-and-play or custom fit-outs) within the GIFT SEZ.
    • Finalize terms with the SEZ developer.
    • Obtain a Provisional Letter of Allotment (PLOA) – a key prerequisite for the approval process.

B. Entity Incorporation (India or IFSC)

Choose a legal structure:

  • Private Limited Company / Public Company
  • LLP
  • Branch Office (for foreign entities)

Then, proceed to:

  • Register with the Registrar of Companies (RoC) via the MCA portal; or
  • Use an existing entity to seek registration in IFSC.

Foreign companies may set up either a branch or subsidiary under FEMA guidelines.

C. Application via IFSCA’s Single Window IT System (SWIT)

Submit a consolidated application through IFSCA’s Single Window IT System (SWIT) for:

  • SEZ Unit Approval (Form F to Administrator IFSCA); and
  • IFSCA Registration/Licensing

Key documents include:

  • PLOA
  • Certificate of Incorporation & PAN
  • Detailed Project Report (DPR)
  • Board Resolutions
  • Financials or Net Worth Declarations

Once submitted:

  • The applicant is invited for a Unit Approval Committee (UAC) meeting to present and discuss the proposal.

D. Post-Approval & Licensing

Upon UAC approval:

  1. Receive a Letter of Approval (LOA) from the Administrator.
  2. Obtain in-principle approval from IFSCA.
  3. Execute the Lease Deed with the developer to finalize office space.
  4. Submit the Bond-cum-LUT (BLUT) for inward supplies from DTA without GST.
  5. Obtain necessary registrations:
    • Eligibility Certificate from IFSCA
    • GST, IEC, RCMC (as applicable)

E. Final IFSCA Approval & Operationalization

  1. Open Foreign Currency and SNRR bank accounts.
  2. Submit a Commencement of Business Letter to IFSCA along with:
    • First client invoice
    • Proof of payment receipt

Once reviewed and approved, you’re all set to begin operations and export services from GIFT IFSC.

Licensing Timeline & Costs

Understanding the cost and timeline involved in setting up a business in GIFT IFSC is crucial for proper planning and execution. Here’s a breakdown of key steps, estimated timelines, and associated costs:

StepEstimated TimelineCost (Approx.)
Entity Registration10–15 days₹10,000–₹25,000 (RoC & legal fees)
Office Space Allotment1–2 weeks₹135–₹140/sq ft/month (varies by developer)
SEZ Unit Approval2–4 weeks₹5000 initially and ₹25000 for acceptance of LOA (No govt fees)
IFSCA Registration4–8 weeksBased on activity type

Note: Timeframes may vary depending on documentation readiness, business category, and regulator response times.

Cost Drivers to Watch For:

  • Office fit-outs (if opting out of plug-and-play)
  • Professional/legal advisory for compliance
  • IFSCA registration fees (higher for financial services)

With government-backed ease of doing business and fast-track timelines, GIFT IFSC offers one of the most efficient regulatory frameworks in India for global-facing businesses.

Key Authorities and Portals

Setting up and operating a business in GIFT IFSC involves coordination with several key authorities. Each plays a distinct role in the incorporation, approval, licensing, and compliance journey.

1. International Financial Services Centres Authority (IFSCA)

The IFSCA is the unified regulator for all financial activities in GIFT City, including banking, insurance, capital markets, fintech, and asset management.

  • It grants licenses to Alternative Investment Funds (AIFs), Portfolio Managers, Insurers, Fintech startups, and more.
  • It also supervises ongoing compliance, business conduct, and disclosure norms.
  • All license applications and filings are made via the official portal:
    🔗 https://www.ifsca.gov.in

2. IFSCA Single Window IT System (SWIT)

  • Digital portal for consolidated SEZ Unit approval and IFSCA licensing
  • Simplifies the application, registration, and compliance tracking process
  • SWIT is the one-stop system for business setup in GIFT City
    🔗 SWIT Portal – Access via IFSCA site


3. Registrar of Companies (RoC) – MCA Portal

Before entering the GIFT ecosystem, you must incorporate an entity under Indian company law.

  • Businesses can register as Private Limited, LLP, or Foreign Branch/Subsidiary
  • Registration is done via the Ministry of Corporate Affairs (MCA) portal
    🔗 https://www.mca.gov.in

Compliance After Licensing

After obtaining approvals and licenses, businesses must meet regular compliance obligations under both IFSCA and SEZ frameworks to retain operational and tax privileges.

1. IFSCA Regulatory Compliance

IFSCA mandates ongoing reporting to ensure transparency and regulatory oversight:

  • Periodic filings of financial statements and business reports
  • Adherence to KYC/AML norms, especially for financial entities like AIFs, fintechs, and brokers
  • Governance disclosures for fund managers, insurers, and listed entities
  • Additional guidelines may apply depending on the sector (banking, insurance, etc.)

2. SEZ Compliance Requirements

Operating in the SEZ zone of GIFT City brings tax and duty advantages but with responsibilities:

  • Monthly Performance Report (MPR): Captures monthly operational metrics for review by the Development Commissioner.
  • Service Export Reporting Form (SERF): Filed monthly by service-exporting units to report the nature and value of exports.
  • Annual Performance Report (APR): Summarizes yearly financials and Net Foreign Exchange (NFE) earnings, assessed by the Unit Approval Committee.
  • Investment & Employee Report: Discloses capital invested and jobs created, highlighting the unit’s economic contribution.
  • NSDL Portal Renewal & AMC Fee: Timely renewal and AMC payment are essential to maintain access to the SEZ Online portal for all compliance filings.

3. Transaction-Based Reporting Requirements

Apart from regular filings, SEZ units must comply with specific transaction-related obligations:

  • Import Clearance: Follow SEZ customs procedures for importing goods/services, ensuring proper documentation.
  • IGST Exemption Filings (DTA Procurement): File necessary declarations to claim IGST exemption on goods/services procured from the Domestic Tariff Area.
  • Execution of Bonds/Undertakings: Depending on the transaction, additional Bond-cum-Legal Undertakings may be required under SEZ rules.


4. Tax Exemption Documentation

One of the key attractions of GIFT City is its tax incentives, but these require ongoing compliance:

  • Renew Eligibility Certificates for 100% income tax exemption (10 out of 15 years)
  • Maintain proof of export of services to continue GST exemptions
  • Track procurement and input services for zero-rated tax treatment

Pro Tip: Missing compliance deadlines can result in suspension of tax benefits or even deregistration. Engage a professional firm or use compliance automation tools to stay ahead.

Common Challenges & How to Avoid Them

While GIFT City offers a streamlined setup process, businesses often face avoidable delays due to common mistakes. Here’s what to watch out for and how to overcome them.

1. Incomplete Documentation

Issue: Many applications are delayed or rejected due to missing or improperly prepared documents, especially during the SEZ approval and IFSCA registration stages.
Solution:

  • Prepare a full documentation checklist before starting
  • Get board resolutions, project reports, financials, and ID proofs verified in advance
  • Use professional assistance for filing Form FA and IFSCA application on SWIT portal

2. Delay in Office Space Allotment

Issue: Without a confirmed Provisional Letter of Allotment (PLOA), SEZ unit approval cannot proceed. Delays in finalizing space often stall the process.
Solution:

  • Engage early with GIFT SEZ developers
  • Choose plug-and-play offices if speed is a priority
  • Lock in PLOA before initiating other applications

3. Lack of Sector-Specific Legal Advice

Issue: GIFT City has sector-specific licensing requirements, especially for AIFs, insurers, banks, and fintechs. Generic advisors may miss critical compliance steps.
Solution:

  • Hire legal and compliance experts with GIFT City or IFSC experience
  • Review the latest IFSCA circulars and guidelines before applying
  • Tailor your licensing and structuring approach to your industry

Pro Tip: A well-prepared setup can cut the total registration timeline in half from 8–10 weeks to just 4–5 weeks.

In conclusion, setting up a business in GIFT City IFSC offers unmatched advantages global market access, 100% tax exemptions, and a streamlined licensing process under unified regulation by the IFSCA. While the registration journey involves multiple steps, understanding the process, choosing the right zone (SEZ or DTA), and ensuring compliance can unlock tremendous value for startups, fintechs, AIFs, insurers, and global firms alike. With the right guidance and preparation, businesses can turn GIFT City into a strategic gateway for international expansion, innovation, and long-term growth.

Role of GIFT City in India’s Stock Market & Trading Regulations

Posted on by Treelife

What is GIFT City and GIFT IFSC?

GIFT City (Gujarat International Finance Tec-City) is India’s first operational smart city and home to the country’s only International Financial Services Centre (IFSC). Strategically located between Ahmedabad and Gandhinagar, it’s designed to rival global financial hubs like Singapore, Dubai, and London.

Launched in 2015, GIFT IFSC serves as a special financial zone for conducting international transactions in foreign currency, primarily catering to non-resident investors and global institutions.

Why GIFT IFSC is a Game-Changer for India’s Stock Market:

  • Unified Regulatory Authority: The IFSCA (International Financial Services Centres Authority) combines powers of RBI, SEBI, IRDAI, and PFRDA, ensuring seamless operations across sectors like stock trading, banking, insurance, and fintech.
  • Attractive Tax Benefits: Capital gains on many IFSC-traded securities are tax-exempt for non-residents; no STT, CTT, or stamp duty applies.
  • Global-Standard Infrastructure: Features like District Cooling Systems, underground utility tunnels, and Tier-IV data centers make it a future-ready hub.
  • Extended Trading Hours: With 20+ hours of daily market access, IFSC exchanges cater to global time zones, attracting overseas investors.

GIFT City is the gateway for India’s integration with global capital markets, offering a low-friction, high-efficiency ecosystem for cross-border financial services.

Why GIFT City Matters for India’s Stock Market

GIFT City IFSC (International Financial Services Centre) is emerging as a cornerstone of India’s capital market modernization. By offering world-class infrastructure, global-standard regulations, and investor-friendly policies, it is redefining how and where capital is raised, invested, and traded.

Bringing Offshore Trading Back to India

Historically, a significant volume of Indian equity derivatives—especially NIFTY contracts—were traded on the Singapore Exchange (SGX) due to its favorable regulatory environment. This meant billions in trading turnover and fees were flowing offshore.

With the introduction of GIFT Nifty in July 2023 via the NSE IFSC-SGX Connect, that activity is now onshore in India, but still accessible globally. GIFT Nifty operates for 20+ hours a day, covering time zones from Tokyo to New York, making it the preferred venue for offshore investors looking to trade Indian equities.

Attracting Foreign Portfolio Investors (FPIs) and Eligible Foreign Investors (EFIs)

GIFT IFSC has become a gateway for international capital flows into India. It welcomes:

  • Foreign Portfolio Investors (FPIs) registered with SEBI
  • Eligible Foreign Investors (EFIs) from FATF-compliant jurisdictions
  • Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs)

Non resident investors enjoy:

  • Zero capital gains tax on many securities
  • No requirement for a PAN or Indian tax return (subject to conditions)
  • No Securities Transaction Tax (STT), Commodities Transaction Tax (CTT), or stamp duty

The result is a cost-effective, compliance-light, and tax-optimized investing environment that attracts hedge funds, sovereign wealth funds, family offices, and more.

Ease of Doing Business: Streamlined Entry for Market Participants

Setting up operations in GIFT City is far more seamless than in mainland India. Thanks to IFSCA’s unified regulatory framework, entities benefit from:

  • Single-window clearance for approvals and compliance
  • Remote broker-dealer model (proposed), allowing foreign brokers to operate without physical presence
  • Lower minimum capital and net worth requirements for intermediaries
  • Quick onboarding for:
    • Broker-dealers
    • Fund managers
    • Custodians
    • Investment advisors

Additionally, the Segregated Nominee Account (SNA) structure makes it easier for FPIs to invest via authorized brokers without needing individual registration, mirroring global norms like the omnibus account system. In essence, GIFT City is bringing back lost market share, drawing in global capital, and reducing red tape for market participants.

Key Stock Market Platforms in GIFT City

GIFT City IFSC is home to cutting-edge trading platforms that are shaping India’s global financial future. With USD-denominated products, extended trading hours, and a tax-optimized structure, these exchanges offer unmatched access to India’s markets for both domestic and foreign investors.

Major Stock Exchanges in GIFT IFSC

ExchangeParent EntityKey Products
NSE IFSCNational Stock Exchange (NSE)GIFT Nifty, currency derivatives, commodities
India INXBombay Stock Exchange (BSE)Global equities, stock derivatives, debt securities
  • NSE IFSC is the only platform where the GIFT Nifty (formerly SGX Nifty) is now traded, offering 20+ hours of market access across global time zones.
  • India INX supports trading in over 50 U.S. stocks, global indices, and offers access to green bonds, Eurobonds, and Masala Bonds.

Both platforms operate under the IFSCA and are built to international standards with low latency, zero STT, and minimal compliance hurdles for foreign investors.

Other Trading Platforms in GIFT City

  • Indian International Bullion Exchange (IIBX)
     India’s first international bullion exchange allows trading of physical gold and silver, with participation from nominated banks, bullion dealers, and foreign entities. It brings transparency and efficiency to the precious metals market.

GIFT City’s stock market ecosystem is designed to attract offshore investors, boost Indian capital markets, and offer a globally competitive trading environment.

Major Trading Products Offered in GIFT IFSC

The Gujarat International Finance Tec-City (GIFT IFSC) has rapidly evolved into a premier destination for diverse financial instruments, catering to both domestic and international investors. SEBI, RBI and IFSCA have also notified relevant amendments permitting listing of shares of Indian companies on IFSC stock exchanges. Below is an overview of the key trading products available:​

Index Futures & Options

  • GIFT Nifty: Previously known as SGX Nifty, this derivative tracks the NIFTY 50 index and offers extended trading hours to accommodate global investors. ​
  • S&P BSE Sensex Derivatives: Contracts based on India’s benchmark Sensex index, providing exposure to the top 30 companies listed on the Bombay Stock Exchange.​

Single Stock Derivatives

  • Futures and options on select Indian blue-chip companies, enabling strategies like hedging and speculative trading. ​

Commodity Derivatives

  • Precious Metals: Gold and silver futures and options contracts.​
  • Energy: Crude oil futures, allowing participation in global energy markets.​
  • Base Metals: Copper futures, among others, catering to industrial commodity traders. ​

Currency Derivatives

  • USD-INR Futures & Options: Facilitating hedging and trading based on the USD to Indian Rupee exchange rate.​
  • EUR-USD Futures & Options: Providing exposure to the Euro against the US Dollar, beneficial for international trade participants. ​

Foreign Currency Bonds & Debt Securities

  • Listing and trading of foreign currency-denominated bonds, including Masala Bonds, allowing issuers to raise capital in foreign currencies while offering investors diversified fixed-income opportunities. ​

Depository Receipts

  • NSE IFSC Receipts: Innovative instruments that enable investors to trade in global stocks, such as top-performing U.S. companies, through unsponsored depository receipts. This initiative broadens access to international equities for Indian residents and NRIs under the Liberalized Remittance Scheme (LRS).

Benefits of Trading in GIFT IFSC

  • USD-Denominated Contracts: Mitigates currency risk for international investors and aligns with global trading practices.​
  • Access to Indian and International Instruments: Offers a diverse portfolio, from Indian equity derivatives to global commodities and currencies.​
  • Reduced Transaction Costs: Transactions are exempt from Securities Transaction Tax (STT), Commodities Transaction Tax (CTT), and stamp duty, enhancing cost efficiency.

GIFT IFSC’s comprehensive suite of trading products, coupled with its strategic benefits, positions it as a compelling hub for global financial activities.

How GIFT City Simplifies Stock Market Regulations

GIFT City IFSC offers a streamlined and globally competitive regulatory ecosystem that reduces compliance burdens and enhances ease of doing business for market participants.

Unified Regulatory Authority: IFSCA

At the core of GIFT City’s regulatory advantage is the International Financial Services Centres Authority (IFSCA). Unlike traditional financial hubs in India where regulatory powers are split among SEBI, RBI, IRDAI, and PFRDA, IFSCA combines all financial regulatory powers under one roof.

Key Benefits:

  • Faster decision-making
  • Clarity in compliance requirements
  • Reduced duplication across agencies

Single-Window Clearance for Market Participants

Setting up a financial entity—whether a broker-dealer, fund manager, or custodian—in GIFT City is significantly easier due to the single-window approval system managed by IFSCA. Applicants receive:

  • Consolidated regulatory approvals
  • Simplified onboarding processes
  • Faster go-to-market timelines

This makes GIFT City an attractive destination for startups and global institutions alike.

Remote Broker-Dealer Model 

The IFSCA has implemented a “remote broker-dealer” framework that would allow foreign brokers to:

  • Operate from outside India
  • Offer services on IFSC exchanges
  • Avoid setting up a physical presence

This move aligns GIFT City with global offshore financial centers like Singapore and Dubai, while widening international participation in India’s markets.

Segregated Nominee Account (SNA) Structure

Introduced in 2023, the SNA structure allows Foreign Portfolio Investors (FPIs) to:

  • Invest in IFSC exchanges via registered brokers
  • Skip direct registration with Indian authorities
  • Benefit from omnibus account-like functionality

This setup reduces onboarding friction and makes GIFT City’s exchanges more accessible to institutional investors, hedge funds, and sovereign wealth funds.

Tax Benefits for Traders and Investors in GIFT IFSC

One of the biggest attractions of GIFT IFSC is its tax-efficient environment, designed to compete with leading offshore financial hubs. Investors—especially non-residents—can benefit from significant tax exemptions and simplified compliance, making GIFT City an ideal destination for global capital allocation.

For Non-Resident Investors: Maximum Tax Relief, Minimal Compliance

0% Capital Gains Tax
  • Capital gains from trading in derivatives, mutual funds, ETFs, and certain foreign currency-denominated securities listed on IFSC exchanges are fully exempt from tax in India for non resident investors.
No PAN or Tax Return Filing
  • Non-residents with no income from India other than capital gains from specified securities from IFSC are:
    • Not required to obtain a PAN
    • Exempt from filing income tax returns, provided they furnish specified details to their broke
No GST on Financial Transactions
  • All transactions on IFSC exchanges are exempt from Goods and Services Tax (GST), significantly reducing the cost of doing business.

Quick Tax Reference Table for non resident investors

Income TypeTax Rate
Capital Gains (Foreign Securities)Exempt
Dividend (From IFSC Companies)10% (plus surcharge & cess)

By offering zero capital gains tax, no indirect taxes, and light-touch compliance, GIFT City IFSC ensures that traders, investors, and institutions can operate with maximum efficiency and profitability.

Foreign Investment in GIFT City Exchanges

GIFT IFSC is fast becoming a preferred gateway for foreign investors looking to access Indian financial markets with minimal regulatory hurdles and maximum operational efficiency.

Who Can Invest in GIFT City Exchanges?

GIFT IFSC allows a wide range of international investors to trade on its platforms, including:

  • Foreign Portfolio Investors (FPIs) registered with SEBI
  • Eligible Foreign Investors (EFIs) from FATF-compliant jurisdictions
  • Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs)

This inclusive approach is designed to attract a global investor base, from institutional players to high-net-worth individuals (HNIs).

Investor-Friendly Compliance Framework

Unlike traditional Indian stock exchanges, GIFT City offers significantly lower compliance requirements:

  • No Permanent Account Number (PAN) required for specified capital gains
  • No Indian bank account needed to invest or trade
  • No tax return filing obligation for non-residents under certain conditions
  • Segregated Nominee Account (SNA) structure enables omnibus-like access for foreign funds

These features make GIFT City as easy to access as global hubs like Singapore, Dubai, and London — but with direct exposure to India’s growing capital markets.

Access to Indian Securities, the Easy Way

Through exchanges like NSE IFSC and India INX, foreign investors can trade:

  • Indian equity derivatives (e.g., GIFT Nifty)
  • Debt securities and bonds
  • Depository receipts of global companies

All transactions are settled in USD, avoiding currency conversion risks for foreign players.

Direct Listing of Indian Companies in IFSC

In a major reform to enhance India’s global financial integration, the Government of India introduced a 2024 amendment that allows Indian public companies to list directly on stock exchanges in GIFT IFSC.

What the 2024 Amendment Means

Previously, Indian companies could only raise capital in international markets through depository receipts (like ADRs or GDRs). With this policy shift:

  • Indian companies can now list their equity shares directly on IFSC exchanges like NSE IFSC and India INX
  • The listing and trading happen in foreign currency, typically USD
  • Companies gain direct access to offshore investors, including sovereign wealth funds, pension funds, and global asset managers

Key Benefits of Direct Listing in GIFT City

  • Raise capital in foreign currency without going through foreign jurisdictions
  • Increased liquidity through participation of global institutional investors
  • Better valuation discovery due to exposure to international markets
  • Enhanced ease of access for global funds that prefer to invest via offshore platforms
  • Reduced costs compared to listing on foreign exchanges like NYSE or LSE

Why Global Investors Prefer IFSC Listings

  • USD-denominated shares
  • No capital gains tax on certain securities
  • Long trading hours (20+ hours/day)
  • Zero STT, stamp duty, and other transaction levies
  • Regulated by IFSCA, India’s unified financial services regulator

With this progressive step, GIFT IFSC is set to become a preferred listing destination for Indian corporates, offering them global visibility while keeping operations rooted in India.

Comparison: GIFT IFSC vs Traditional Indian Stock Exchanges

As India positions itself as a global financial hub, GIFT IFSC offers an alternative to conventional stock exchanges like NSE and BSE. Here’s a clear comparison of how GIFT City IFSC stands apart from traditional mainland exchanges in terms of regulation, taxation, and investor experience.

FeatureGIFT IFSCNSE/BSE (Mainland India)
RegulatorIFSCA (Unified regulator for IFSC)SEBI, RBI, IRDAI, PFRDA
CurrencyUSD-denominated tradingINR-denominated trading
Trading Hours20+ hours/day (global overlap)9:15 AM – 3:30 PM IST
TaxationNo STT, CTT, stamp duty0% capital gains tax for non-residentsSTT, CTT, stamp duty applicableCapital gains tax applies
ComplianceLow compliance for NRIs/FPIsNo PAN or bank account required (if conditions met)Higher onboarding hurdlesPAN, KYC, bank account mandatory

GIFT City IFSC is transforming India’s financial ecosystem by offering a globally competitive platform for trading, investing, and capital raising. With its unified regulation under IFSCA, USD-denominated securities, tax exemptions for non-residents, and low compliance barriers, it has emerged as the ideal gateway for foreign investors, FPIs, and Indian companies seeking offshore exposure. As India aims to become a global financial powerhouse, GIFT IFSC is leading the charge by bridging global capital with Indian markets, making it a critical driver in the evolution of the Indian stock market landscape.

What is an IFSC Banking Unit (IBU) & How It Works?

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What is an IFSC Banking Unit (IBU)?

An IFSC Banking Unit (IBU) is a specialized branch of a bank that operates within an International Financial Services Centre (IFSC). These units are designed to provide financial services to non-resident individuals and foreign entities, offering a variety of banking and financial products that are not generally available in domestic banking channels. As of December 31, 2024, there are 28 IBUs operating in GIFT IFSC, collectively holding over USD 1 billion in retail demand and term deposits from more than 6,897 Non-Resident Indians and Foreigners​. IBUs also enable residents to open Foreign Currency Accounts under the RBI’s Liberalised Remittance Scheme. They are critical for fostering India’s global financial ecosystem, serving as hubs for international finance and facilitating cross-border trade and investment.

Definition and Key Features of an IBU

An IBU is essentially a banking unit located within an IFSC, such as GIFT City in India, that operates in a foreign-exchange and regulatory framework distinct from domestic banking norms. IBUs are authorized to offer a wide range of services, including offshore banking, trade finance, investment banking, etc. primarily to foreign entities and non-resident Indians (NRIs).

Key features of an IBU include:

  • Offshore Banking Services: IBUs offer services that cater to the international market, such as foreign exchange, investment banking, and structured finance.
  • Tax Exemptions: Banks operating within an IBU enjoy certain tax exemptions, which makes the unit more attractive to foreign banks and financial institutions.
  • Regulatory Ease: IBUs operate under a more flexible and simplified regulatory framework compared to domestic banking units, making it easier for foreign financial institutions to establish and run these units.

What is the Difference Between an IBU and Traditional Banking Units?

Traditional banking units cater to domestic markets and operate under the country’s central bank regulations. In contrast, an IFSC Banking Unit is geared towards international operations, offering a more specialized and flexible environment for global financial transactions.

  • Scope of Services: Traditional banks focus on services for domestic clients, while IBUs cater primarily to foreign clients, non-residents, and international businesses.
  • Regulatory Environment: IBUs benefit from a more liberal regulatory framework, allowing foreign banks to operate with reduced bureaucratic hurdles, unlike the stringent regulations in domestic banking.
  • Taxation: IBUs are granted tax exemptions or lower tax rates to attract foreign financial institutions, which is not the case for traditional banks.

Core Purpose and Role in International Finance

The primary purpose of IBUs is to enhance India’s position as a global financial hub. By offering offshore banking services, IBUs attract international capital and financial expertise into India. These units play a significant role in bridging the gap between India and the global financial markets, facilitating:

  • Cross-border Trade and Investment: IBUs provide financial services that promote international trade, investment, and foreign direct investment (FDI) by acting as intermediaries for foreign businesses operating in India.
  • Capital Flow into India: IBUs help in channeling global capital into India’s financial markets and facilitate access to international investors seeking exposure to Indian financial products and services.
  • Global Financial Integration: These units help integrate India’s financial sector with international banking practices and financial markets, increasing India’s global financial standing.

Legal and Regulatory Framework for IBUs

  • Any Indian or foreign bank (whether having any presence in India or not) can set up an IBU in the IFSC in the form of a branch. 
  • The parent bank must obtain a ‘no-objection’ certificate from the home country regulator and submit undertakings to the IFSCA. 
  • Minimum capital of USD 20 million to be maintained at the parent bank level. 
  • The banking company is required to comply with the prudential directions and instructions issued by the home regulator and ensure that the IBU has access to the parent bank’s liquid assets and financial resources, which are adequate in relation to the nature, size and complexity of the business of the IBU. 
  • IBUs are required to follow Know Your Customer (KYC) norms, combating the financing of terrorism and other anti-money laundering requirements, including reporting requirements issued by the Reserve Bank from time to time unless otherwise specified by the IFSCA.

Prudential Relaxations

  • Unlike domestic banks, IBUs are exempt from maintaining the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) mandated by the RBI. 
  • IBUs are required to maintain Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) at the branch level, although with IFSCA’s permission, these can be maintained at the parent bank level. 
  • Leverage ratio (LR) for IBUs may be maintained at the parent bank level and subject to the regulations specified by the respective home regulator applicable to the parent bank unless otherwise specified by the IFSCA. 
  • IBUs are required to maintain a retail deposit reserve ratio (RDRR) on a daily basis at 3% of the deposits raised from individuals outstanding as of the end of the previous working day.

How Does an IFSC Banking Unit (IBU) Work?

An IBU operates within an International Financial Services Centre (IFSC), providing specialized banking and financial services to non-residents and foreign entities. These units are structured to cater to international markets and offer a range of offshore services not available through traditional domestic banking units. The operations and functionality of an IBU play a critical role in integrating India into the global financial system and enhancing cross-border capital flows.

Operations and Functionality of an IBU

The core functionality of an IBU revolves around providing a flexible, global platform for banking services. IBUs primarily engage in offshore banking and are governed by a set of regulations that encourage foreign investment and simplify international financial operations.

Key operational functions include:

  • Cross-border Transactions: IBUs facilitate seamless financial transactions between India and global markets, promoting international trade and investment.
  • Global Investment Services: They offer services like global treasury management, investment banking, and other financial products to international clients.
  • Currency and Risk Management: IBUs manage risks associated with currency fluctuations and market volatility through specialized services like foreign exchange and hedging.

Core Banking Activities of an IBU

The core banking activities of an IBU are similar to those of traditional banks but with a focus on international clientele and cross-border financial services. These activities include:

  • Deposits and Loans: IBUs offer deposits and loans primarily to foreign clients, businesses, and governments.
  • Foreign Exchange Services: Facilitating the exchange of currencies for international trade and investment.
  • Payment Services: Providing payment solutions for businesses and individuals involved in global transactions.

Unlike traditional banks, IBUs operate with fewer regulatory restrictions, enabling them to provide more flexible services tailored to global financial markets.

Types of Financial Services Provided

IBUs offer a wide range of financial services tailored to foreign clients, non-resident Indians (NRIs), and global businesses. These services are designed to address the unique needs of international clients, which differ significantly from the services offered by domestic banks.

Some of the primary financial services provided by IBUs include:

  • Offshore Banking Services: These services are tailored for international clients seeking to open accounts, invest, or borrow in foreign currencies. IBUs act as gateways for global financial transactions and provide a variety of offshore banking products.
  • Foreign Exchange (Forex) Services: IBUs are key players in forex markets, offering foreign exchange services to clients engaged in international trade, investment, and risk management. They also facilitate cross-border remittances and currency conversions for businesses.
  • Derivatives Trading: IBUs offer derivatives products like options, futures, and swaps to hedge against currency and market risks. These services are integral for multinational corporations and foreign investors looking to manage financial risk in volatile markets.

Integration with Global Financial Markets

One of the main objectives of an IBU is to integrate India into the global financial system. By offering a specialized regulatory framework and operational flexibility, IBUs act as intermediaries that connect international clients with the Indian financial markets.

Key integrations include:

  • Cross-border Investments: IBUs facilitate international investments by offering global businesses access to Indian financial products and vice versa.
  • Global Banking Networks: IBUs are integrated into the global banking network, enabling smooth financial transactions and the exchange of capital between India and international markets.
  • Regulatory Compliance with International Standards: IBUs adhere to global financial regulations, ensuring that international investors can trust Indian financial institutions for their operations.

IBU Banking Products and Services

As of December 2024, 28 IBUs are operational in GIFT City, playing a central role in international finance. These IBUs collectively manage over USD 1 billion in retail demand and term deposits from 6,897 Non-Resident Indians and Foreigners, highlighting growing investor trust in India’s global financial hub​.

IBUs provide a wide range of specialized banking products designed for international clients, foreign businesses, and high-net-worth individuals. These services are structured to support cross-border trade, global investment, and efficient financial risk management.

Offshore Banking Services

Offshore banking is the cornerstone of IBUs. These services cater to foreign clients and non-residents managing wealth or business outside their home country.
Key offerings include:

  • Foreign Currency Accounts: Allow businesses and individuals to hold and manage funds in any of the 14 freely convertible currencies permitted in GIFT IFSC.
  • International Loans and Credit: Loans offered in global currencies for cross-border business operations.
  • Investment Solutions: Tailored investment products like bonds, mutual funds, and equities for international investors.

Foreign Exchange and Derivatives

As of Q3 FY 2024-25, IBUs contributed significantly to the overall derivative market in IFSC, with cumulative derivatives trade volume reaching USD 78.2 billion, and aggregate open interest crossing USD 120 billion​.
They offer:

  • Currency Derivatives: Futures and options to hedge against exchange rate volatility.
  • Interest Rate Derivatives: Instruments to manage global interest rate exposures.
  • Commodity Derivatives: Products related to commodities like gold and silver to hedge against price swings.

Structured Finance, Trade Finance, and Investment Banking Services

IBUs are also active in complex financial structuring, cross-border trade financing, and corporate advisory.
Core services include:

  • Structured Finance: Asset-backed securities (ABS), collateralized debt obligations (CDOs), and other customized structures.
  • Trade Finance: Solutions such as letters of credit, export/import financing, and forfaiting to facilitate global commerce.
  • Investment Banking: Services like M&A advisory, capital raising, and securities issuance for international expansion or restructuring.

Benefits of Setting Up an IFSC Banking Unit

Setting up an IBU offers several key benefits, both for foreign banks and financial institutions, as well as for the Indian economy. These advantages make India’s International Financial Services Centres (IFSCs), such as GIFT City, an attractive destination for global financial entities.

For Foreign Banks and Financial Institutions

1. Access to Tax Incentives and Exemptions

One of the major advantages of setting up an IBU is the tax benefits it offers. IBUs enjoy tax holiday for a 10 year period under section 80LA, making them highly cost-effective for foreign banks and financial institutions. These tax incentives are part of India’s strategy to attract global players to its financial markets.

2. Regulatory Flexibility and Ease of Operations

IBUs operate under a more flexible regulatory framework compared to traditional banks. This flexibility allows foreign banks to manage operations with fewer bureaucratic hurdles, creating a more efficient environment for international business. The simplified regulatory structure ensures that foreign financial institutions can offer their services with ease, adhering to international standards while reducing compliance costs.

3. Expanded International Market Opportunities

IBUs enable foreign financial institutions to access Indian markets and offer their services to global clients. By operating within an IFSC, foreign banks can tap into the growing Indian economy, making it easier to conduct cross-border business. This opens up new international market opportunities for foreign banks to expand their reach and gain access to emerging market sectors.

For the Indian Economy

1. Attracting Foreign Investments

Setting up IBUs in India plays a significant role in attracting foreign investments. These units make it easier for global investors and multinational companies to engage with India’s financial markets. The presence of IBUs enhances India’s attractiveness as a destination for foreign capital, supporting the nation’s overall economic growth.

2. Enhancing India’s Position as a Global Financial Hub

By establishing IBUs, India strengthens its position as a global financial hub. The IFSCs, with their international focus and regulatory advantages, foster increased global participation in India’s financial markets. This, in turn, boosts India’s role in the international financial system and promotes the country as a leading destination for global financial activities.

3. Job Creation and Economic Growth in the IFSC

IBUs contribute to job creation within the IFSCs, fostering economic growth and development. The establishment and operation of IBUs lead to increased demand for skilled professionals in banking, finance, legal, and compliance sectors. This helps create new employment opportunities and supports the economic infrastructure of the region, driving further growth and development in India’s financial ecosystem.

Key Features and Advantages of IFSC Banking Units

IBUs offer several strategic advantages, making them an attractive option for foreign financial institutions. These benefits span across taxation, regulatory, and geopolitical advantages, contributing to India’s position as a global financial hub.

Taxation Benefits

1. Overview of Tax Exemptions Available to IBUs

IBUs enjoy a range of tax exemptions that significantly reduce the tax burden for foreign financial institutions. Key tax benefits include:

  • Tax holiday under section 80LA for a 10 year period which includes no tax on interest income earned by IBUs.
  • Exemption on income from over the counter derivative / offshore derivative instruments.
  • No requirement of withholding tax by Indian residents for paying interest on External Commercial Borrowing (ECB) to IBUs.

These incentives make IBUs a highly attractive option for foreign banks and institutions, allowing them to operate with a reduced tax burden.

2. Advantages of a Low Tax Regime for Foreign Banks

The low tax regime offered to IBUs is one of the most significant advantages for foreign banks. By operating in an IFSC, these institutions can benefit from tax holiday for 10 years under section 80LA, and exemptions from withholding tax on interest income. This makes India a highly competitive destination for international banks seeking to reduce operational costs while offering services to global clients.

Regulatory Benefits

1. Simplified and Flexible Regulatory Framework

IBUs benefit from a simplified and flexible regulatory framework that reduces operational complexity. Unlike domestic banks that are bound by strict local regulations, IBUs are subject to a more liberal set of rules. This regulatory ease encourages foreign banks to set up and operate in India, promoting a more dynamic financial environment that aligns with global practices.

Geopolitical and Economic Benefits

1. IFSC as a Catalyst for Economic Growth and Innovation

IFSCs, with their focus on international finance, act as a catalyst for economic growth and innovation. The establishment of IBUs within these centres fosters the development of new financial products, services, and technologies, encouraging economic progress. This innovation leads to more diversified financial markets and supports the overall growth of India’s economy.

2. Bridging the Gap Between India and Global Financial Markets

IBUs serve as a crucial link, bridging the gap between India and global financial markets. They help integrate India’s financial sector into the global economy by providing foreign investors with easier access to Indian financial products, while also offering Indian businesses the opportunity to tap into global capital markets. This global integration enhances India’s financial standing, attracting more international investments.

Setting Up an IFSC Banking Unit: Step-by-Step Guide

Setting up an IBU in India’s International Financial Services Centre (IFSC) is a structured process that involves meeting eligibility criteria, applying for necessary approvals, and ensuring compliance with regulatory standards. Below is a step-by-step guide to help foreign banks and financial institutions navigate the process.

Step 1: Eligibility Criteria

Who Can Set Up an IBU?

Foreign financial institutions, including foreign banks and multinational corporations, are eligible to set up an IBU. This also includes global asset management firms, insurance companies, and other financial entities that meet the regulatory standards.

Requirements for Setting Up an IBU in the IFSC:

  • Financial Standing: The institution must be financially stable and meet the capital requirements set by IFSCA (Banking) Regulations, 2020, both Indian and foreign banks can establish an IBU.
  • Relevant Experience: Foreign banks and institutions with experience in international banking or financial services are generally preferred.
  • Global Operations: The applicant should have a global presence or significant international business operations to justify the need for an IBU.

Step 2: Application Process

Application Procedure and Documents Required

To establish an IBU, foreign institutions need to submit an application to the IFSCA. Key documents typically required include:

  • Detailed business plan outlining the institution’s operations, financial services, and target markets.
  • Financial statements and proof of solvency.
  • Risk management framework ensuring adherence to international banking standards.

Regulatory Approvals and Steps Involved

Once the application is submitted, IFSCA reviews the documentation, business plan, and compliance strategies.This step also includes compliance with specific conditions set by Indian regulators.

Step 3: Operational Setup

Infrastructure and Facilities Required to Establish an IBU

To set up an IBU, foreign banks must establish appropriate infrastructure within the IFSC. This includes:

  • Office space within the designated IFSC area (such as GIFT City in Gujarat).
  • Technology systems that meet global banking standards.
  • Skilled staff capable of handling international financial operations and compliance.

Compliance with International Standards and Local Regulations

The operational setup must align with both IFSCA regulations and norms as prescribed by IFSCA through the banking handbook following the internationally accepted standards (like Basel III for banking stability). This ensures the IBU operates efficiently while maintaining transparency and risk management.

Ongoing Compliance and Reporting Obligations

IBUs must comply with continuous regulatory oversight, which includes:

  • Regular audits to ensure financial operations are transparent and compliant with Indian laws.
  • Reporting to the IFSCA on financial health, operations, and market activities.
  • Adherence to international compliance frameworks to ensure global standards are met.

International Financial Services Centres (IFSCs): A Global Perspective

Global IFSCs and India’s Position

International Financial Services Centres (IFSCs) are specialized zones designed to promote global financial services with relaxed regulatory environments. Leading IFSCs globally include Dubai International Financial Centre (DIFC), Singapore’s Financial District, and London’s Canary Wharf. These centres offer financial services such as banking, insurance, and capital markets with tax incentives and regulatory flexibility.

India’s IFSC at GIFT City (Gujarat International Finance Tec-City) is emerging as a competitive hub, offering similar benefits. It’s designed to attract global financial institutions, making India a key player in the global finance market.

Strategic Importance of IFSC Banking Units in Global Finance

How IBUs Contribute to Making IFSCs a Global Financial Hub

IBUs are essential to the success of IFSCs, acting as gateways for international financial services in India. They facilitate cross-border trade, investment, and capital flow, helping India integrate into global financial markets. IBUs offer services like offshore banking, foreign exchange, and investment banking, which boost India’s reputation as a global financial centre.

Role of IBUs in Facilitating Cross-Border Trade and Finance

IBUs allow businesses to manage international financial operations seamlessly, offering services such as foreign exchange and derivatives trading, thereby boosting cross-border trade and foreign investment. Their role in facilitating global finance positions India’s IFSCs as critical hubs in the global financial system.

Challenges Faced by IFSC Banking Units

Regulatory and Operational Challenges

Potential Hurdles in Setting Up and Operating an IBU

While IBUs offer many advantages, setting them up in India involves challenges such as complex compliance requirements, aligning with both Indian and international regulatory frameworks, and ensuring operational efficiency in a competitive global market.

Addressing the Need for International Regulatory Alignment

To thrive, IBUs must ensure alignment with global regulatory standards. Regulatory inconsistencies could hinder the growth of IBUs if not properly managed by authorities.

Economic and Market Risks

Market Risks Associated with Operating Offshore Banking Units

Operating in a volatile global market exposes IBUs to currency fluctuations, political instability, and global economic downturns. Managing these risks requires effective hedging and robust risk management frameworks.

Navigating Global Economic Shifts and Volatility

Global market shifts and economic volatility can affect IBUs’ operations, requiring them to be agile and resilient to maintain stability in their offerings.

Future of IFSC Banking Units in India

Growing Role of IBUs in the Global Financial Landscape

The role of IBUs in India is expected to grow significantly as GIFT City continues to develop. Anticipated expansion of IBUs will lead to greater integration of India into the global financial landscape, attracting foreign investments and boosting India’s financial services sector.

How IBUs Can Contribute to India’s Economic Strategy

IBUs contribute to India’s economic strategy by attracting foreign direct investment (FDI), promoting global capital flows, and improving India’s market competitiveness. They help integrate India into the global financial system, supporting the country’s economic growth.

Innovative Developments and Trends

Technological Advancements Influencing IBUs (Fintech, Digital Banking)

The rise of fintech and digital banking is reshaping the role of IBUs, enhancing operational efficiency and providing global clients with innovative financial products.

Trends in Sustainable Finance and Their Impact on IBUs

Sustainable finance trends are influencing IBUs, with a growing emphasis on green bonds and sustainable investment products to attract environmentally-conscious investors.

GIFT City Tax Exemptions for Foreign Investors, NRIs & Companies

Posted on by Treelife

What is GIFT City?

Gujarat International Finance Tec-City (GIFT City) is India’s first International Financial Services Centre (IFSC), strategically developed to position India as a global financial hub. Located in Gandhinagar, Gujarat, GIFT City operates as a foreign jurisdiction within India, offering global-standard infrastructure, tax-neutral status, and seamless regulatory support.

Approved under the Special Economic Zone (SEZ) framework and governed by the International Financial Services Centres Authority (IFSCA), GIFT City is tailored for international investors, Non-Resident Indians (NRIs), and global financial institutions looking to access Indian and international markets efficiently.

It hosts leading exchanges like NSE IFSC and India INX, enabling offshore investors to trade in global equities, derivatives, and debt instruments in multiple currencies. Investors benefit from a range of tax exemptions, relaxed regulations, and zero transaction levies—making it a preferred destination for cross-border financial activities.

Whether you’re an NRI exploring India-centric opportunities or a foreign company seeking to expand in Asia, GIFT City India delivers a compelling mix of investment access, tax incentives, and global connectivity.

Why Foreign Investors Are Choosing GIFT City

GIFT City (Gujarat International Finance Tec-City) is fast becoming a top destination for international investors, thanks to its liberal policies, tax-efficient environment, and world-class financial infrastructure. Positioned as India’s answer to Dubai and Singapore, GIFT City offers several advantages that attract foreign investors, multinational banks, asset managers, and NRIs.

100% Foreign Ownership Allowed

Foreign investors can set up wholly-owned subsidiaries or branches in GIFT City with no requirement for local Indian ownership. This is a major draw for global businesses seeking direct access to India’s growing financial market while maintaining complete control over their operations.

Regulated by IFSCA – A Single Unified Authority

The International Financial Services Centres Authority (IFSCA) is the sole regulator for all financial services in GIFT City. This reduces regulatory overlap, streamlines licensing, and provides clarity across sectors such as banking, capital markets, insurance, and asset management. The ease of doing business and regulatory transparency are key attractions for foreign players.

Seamless Access to Global Markets

GIFT City allows investments across a wide spectrum of international financial instruments, including:

  • Global equities (e.g., US stocks)
  • Debt instruments (e.g., Masala Bonds, Green Bonds)
  • Currency and commodity derivatives
  • Exchange-traded funds (ETFs)

Exchanges like India INX through its Global access platform and NSE IFSC offer trading in over 135 international stocks, and the ability to invest in multi-currency assets, including USD, EUR, JPY, and more.

Powerful Tax Incentives & Financial Efficiency

One of the biggest reasons foreign investors choose GIFT City is the comprehensive tax benefits:

  • Capital Gains Tax: Exempt for non resident investors
  • Interest Income: Completely tax-free if earned by non-resident from IFSC entities
  • Dividend withholding tax: Capped at 10% for NRIs, compared to up to 20% in mainland India
  • Corporate Tax Holiday: 100% tax exemption for 10 out of 15 years for IFSC units
  • No Securities Transaction Tax (STT) and other charges on trades

These incentives significantly reduce the cost of capital and improve post-tax returns for both individuals and corporate investors.

Growing Institutional Participation

According to recent data (2024), GIFT City hosts over 766 registered entities, including Deutsche Bank, Barclays, MUFG, and several leading Indian banks. The daily trading volumes on India INX and NSE IFSC have seen exponential growth, indicating increased global interest and institutional confidence.

GIFT City India offers foreign investors a unique mix of liberal ownership rules, global market access, tax efficiency, and regulatory ease—making it a compelling hub for cross-border finance and offshore investments.

GIFT City Tax Benefits: Overview

GIFT City (Gujarat International Finance Tec-City) stands out as a tax-efficient destination for global investors, thanks to a range of strategic tax exemptions and incentives offered under Indian tax laws. These benefits make it an attractive alternative to traditional financial hubs like Singapore or Dubai, especially for NRIs and foreign entities seeking better post-tax returns and minimal compliance burden.

Key Tax Incentives in GIFT City

  • Zero Tax on Certain Interest Income: Interest earned by NRIs or foreign investors from IFSC entities is fully exempt from tax in India. This is particularly beneficial for global treasury centres / Finance companies for ECB lending to Indian entities.
  • Reduced Dividend Tax (10%) for NRIs: Dividends received from companies or funds operating in GIFT City are taxed at a flat 10% rate for NRIs—lower than the standard 20%+ cess and surcharge applicable in mainland India.
  • No Securities Transaction Tax (STT): Trades executed on GIFT City exchanges (India INX, NSE IFSC) are not subject to STT and other incidental charges, reducing transaction costs and improving overall returns for investors.

These benefits collectively enhance investment efficiency, making GIFT City a cost-effective and globally competitive option for cross-border financial transactions.

Tax Benefits for Foreign Investors, NRIs, and Companies in GIFT City

GIFT City offers a highly attractive tax regime for foreign investors, Non-Resident Indians (NRIs), and international companies, making it one of the most efficient financial zones in India for cross-border investments. These tax incentives not only improve after-tax returns but also simplify compliance and lower transaction costs.

Tax Benefits for Foreign Investors & NRIs in GIFT City

NRIs investing through GIFT City enjoy multiple tax advantages over traditional investment routes in India:

  • Dividend Income Tax:
    Dividends received from IFSC-based entities are taxed at a flat 10%, compared to up to 20% in mainland India.
  • Capital Gains:
    Exempt for non-resident investors on certain specific securities subject to additional conditions
  • Interest Income:
    Completely tax-free if the interest is earned by NRI from IFSC entity.
  • Zero Stamp Duty & STT:
    All trades executed on IFSC exchanges are exempt from stamp duty and Securities Transaction Tax, reducing overall investment costs.

Tax Benefits Snapshot for NR investors: GIFT City vs Mainland India (Investor-Focused)

Income TypeTax Rate in GIFT CityTax Rate in India
Dividends10%Up to 20%
Capital Gains0% in some cases12.5% – 30%
Interest Income0%Up to 30%
Stamp Duty0%0.005% – 0.015%

These tax breaks make GIFT City a preferred investment destination for NRIs and foreign companies looking to maximize returns while maintaining regulatory clarity.

Tax Benefits for Foreign Companies in GIFT City

Foreign companies and financial institutions setting up operations in GIFT City IFSC enjoy a suite of powerful tax incentives that are designed to lower operating costs, boost profitability, and encourage long-term investment. These benefits position GIFT City as a leading offshore destination in Asia, competing with hubs like Singapore and Dubai.

100% Corporate Tax Holiday for 10 Years

One of the most attractive incentives is the 100% tax holiday for any 10 consecutive years out of the first 15 years of operation in GIFT City. This exemption applies to IFSC-registered units, including foreign banks, insurers, fund managers, and fintech companies.

  • No corporate income tax during the selected tax-free period.
  • Offers significant cost savings and competitive positioning for global operations.

GST Exemptions for Specified Services

Services rendered to or by IFSC entities are exempt from Goods and Services Tax (GST). This further reduces the tax burden and encourages service exports from GIFT City.

Capital Gains Tax Exemption

Non resident investors are eligible for full exemption on capital gains arising from the transfer of specified securities, such as:

  • IFSC-listed bonds
  • Derivatives
  • Foreign currency-denominated instruments

This exemption helps global investors optimize their returns while staying tax-efficient.

Regulatory & Operational Ease in GIFT City

GIFT City offers unmatched regulatory and operational simplicity for foreign investors and companies, making it an attractive destination for global financial institutions. The unique legal and regulatory framework ensures smoother operations, minimal bureaucracy, and easier compliance for both NRIs and foreign entities.

Single Regulator (IFSCA) for All Financial Products

GIFT City is governed by a single regulatory body, the International Financial Services Centres Authority (IFSCA). This streamlined regulatory approach ensures clear guidelines, quicker approvals, and reduced complexities for entities operating in sectors such as banking, capital markets, insurance, and asset management. With one governing body for all financial products, investors and companies experience:

  • Unified Compliance: Simplifies operational processes.
  • Faster Approvals: Reduced delays in starting and running businesses.

Operates as a Foreign Jurisdiction within India

While located in India, GIFT City operates as a special economic zone (SEZ), treating its businesses and financial transactions similarly to those in global financial hubs like Singapore and Dubai. This means that foreign entities can benefit from tax neutrality and access to global markets without facing the usual Indian regulatory constraints.

No FEMA Restrictions for Entities in GIFT City

Foreign Exchange Management Act (FEMA) restrictions, which usually govern the flow of funds in and out of India, do not apply within GIFT City. This gives foreign investors greater freedom to:

  • Move capital freely across borders
  • Invest in foreign currency-denominated instruments without restrictions

This unique feature enhances GIFT City’s appeal as a cross-border investment hub.

Key Investment Instruments in GIFT City

GIFT City offers a wide array of investment opportunities, catering to both global investors and NRIs who are looking to diversify their portfolios. The range of financial instruments available in this International Financial Services Centre (IFSC) allows investors to access both Indian and global markets with tax-efficient benefits.

Global Equities & ETFs

GIFT City provides easy access to global equities and Exchange Traded Funds (ETFs) listed on international exchanges such as India INX and NSE IFSC. Investors can trade in some of the world’s leading stocks and ETFs, providing diversification across global markets without leaving India’s shores. This is an excellent opportunity for NRIs and foreign investors to take advantage of global growth trends.

Debt Instruments (Masala Bonds, Green Bonds)

Debt instruments, especially Masala Bonds (rupee-denominated bonds) and Green Bonds, are becoming popular among investors in GIFT City. These bonds are issued in foreign currencies, allowing for diversification in fixed-income portfolios.

  • Masala Bonds offer foreign investors the opportunity to invest in the Indian bond market while mitigating currency risk, as the bonds are issued in Indian rupees.
  • Green Bonds focus on financing sustainable projects, attracting eco-conscious investors looking to back environmentally friendly initiatives.

These instruments provide steady income streams with relatively lower risk compared to equities, making them ideal for conservative investors.

Derivatives (FX, Commodities, Equity)

GIFT City also facilitates trading in derivatives such as foreign exchange (FX) contracts, commodity futures, and equity derivatives. These products provide investors with opportunities to:

  • Hedge against currency fluctuations, commodity price volatility, or market risks.
  • Leverage positions for greater returns, though at higher risk.

By offering multi-currency derivatives and cross-border investment options, GIFT City enables both institutional and retail investors to manage risk more efficiently in a globalized financial ecosystem.

Sovereign Securities

For those seeking safe and low-risk investments, sovereign securities issued by the Indian government are also available in GIFT City. These government bonds are a reliable investment option for risk-averse investors, offering fixed returns and government-backed security.

Alternative Investment Funds (AIFs) in IFSC

GIFT City’s regulatory framework also allows the creation of Alternative Investment Funds (AIFs), which include hedge funds, private equity funds, and venture capital funds. AIFs in GIFT City are particularly attractive to foreign investors as they provide:

  • Access to high-growth sectors like technology and infrastructure.
  • The opportunity to invest in niche markets with potentially higher returns.

AIFs offer a way for sophisticated investors to gain exposure to markets that are typically harder to access or have high barriers to entry.

Final Thoughts: Is GIFT City Worth It for Foreign Investors?

GIFT City offers a unique combination of tax benefits, regulatory ease, and global market access, making it an attractive destination for foreign investors and NRIs. With incentives like 100% tax holidays, zero stamp duty, low capital gains tax, and simplified compliance, GIFT City provides a cost-effective platform for international businesses and individuals seeking to invest in India. The ability to operate under a single regulator (IFSCA), combined with access to global equities, bonds, and derivatives, further enhances its appeal. For foreign investors looking for a tax-efficient, globally connected financial hub, GIFT City presents a compelling option that blends the best of Indian and international finance.

Private Equity & Venture Capital in GIFT City

Posted on by Treelife

Introduction

India’s financial services landscape is undergoing a silent revolution — and at its heart lies GIFT City (Gujarat International Finance Tec-City), the country’s first International Financial Services Centre (IFSC). Strategically positioned between Ahmedabad and Gandhinagar, GIFT City is emerging as a new-age offshore hub for global financial institutions, fintech firms, and increasingly, private equity (PE) and venture capital (VC) funds.

GIFT City was conceived to onshore global financial flows that previously bypassed India in favor of Singapore, Dubai, or Luxembourg. With the establishment of the International Financial Services Centres Authority (IFSCA) in 2020, a unified regulator for all financial entities in GIFT IFSC, the ecosystem saw a wave of regulatory clarity, ease of doing business, and fiscal incentives — making it especially attractive for alternative investment managers.

In recent years, the interest in private equity in GIFT City and venture capital in IFSC has surged. As of end-2024, 139 Fund Management Entities (FMEs) have registered in the IFSC, raising over USD 14.88 billion in total commitments across various schemes. The appeal? A combination of 10-year tax holiday under Section 80LA, dealing in specified foreign currency, and the ability to access global LPs and institutional capital.

Crucially, this growth aligns with the Indian government’s strategic push to reverse externalization or “flipping” — the trend of Indian startups relocating to foreign jurisdictions like Delaware or Singapore for tax and valuation advantages. The IFSCA’s policy and tax reforms aim to position GIFT IFSC as a credible alternative, enabling Indian startups to raise foreign capital while remaining domiciled in India.

In short, GIFT City is no longer a vision — it’s fast becoming a global gateway for Indian innovation, capital, and investment opportunities, especially in the private equity and venture capital space.

Why GIFT City is Attractive for Private Equity & Venture Capital

As global investors look for efficient fund domiciles, GIFT City’s IFSC is fast gaining prominence as a preferred destination for private equity (PE) and venture capital (VC) funds. Backed by a progressive regulatory framework, generous tax benefits, and world-class infrastructure, the benefits of GIFT City for investors are hard to ignore.

Tax & Regulatory Advantages

GIFT City offers one of the most investor-friendly tax environments in Asia:

  • 100% income tax exemption for PE/VC fund managers and entities for any 10 consecutive years out of 15, under Section 80LA of the Income Tax Act
  • Zero capital gains tax on transfer of specified securities for non resident investors subject to certain conditions in case of investment in a Category III AIF
  • Exemption from key levies:
    • GST on financial services
    • Securities Transaction Tax (STT)
    • Commodity Transaction Tax (CTT)

These incentives significantly enhance fund returns and reduce the cost of doing business, especially compared to traditional offshore jurisdictions.

Ease of Fund Formation & Operations

GIFT City is governed by the International Financial Services Centres Authority (IFSCA) — a unified regulator that simplifies operations through streamlined processes.

  • Single-window clearance for fund managers and entities via the IFSCA Single Window IT (SWIT) portal
  • Introduction of a Common Application Form (CAF) that merges multiple regulatory filings into one, reducing a lot of to and fro.
  • Fast-track fund setup timelines and a pro-business approach compared to jurisdictions like Singapore, Dubai or Luxembourg

These steps reduce compliance costs and setup complexity, helping VC and PE firms focus on investing.

Currency & Investment Flexibility

Another game-changer for global fund managers is unrestricted currency movement:

  • Free repatriation of capital and profits for non-resident investors
  • Transactions allowed in freely convertible foreign currencies, including USD, EUR, GBP, SGD
  • Funds in GIFT IFSC are treated as non-residents under FEMA, enabling seamless global investing and structuring

This flexibility makes GIFT IFSC a robust gateway for cross-border investments into and from India.

GIFT City vs. Singapore vs. Luxembourg: PE/VC Fund Comparison

ParameterGIFT City (India)SingaporeLuxembourg
Tax on Capital GainsExempt for non resident investors subject to certain conditionsLimited ExemptionVaries
Tax Holiday on management fees for Fund Manager 10 years (Sec 80LA)VariesVaries
Currency FlexibilityFullFullFull
Regulatory EaseSingle-window (IFSCA)ModerateModerate
Setup Time4–6 weeks8–10 weeks8–12 weeks

This table clearly shows why GIFT City is quickly emerging as a top choice for fund managers seeking cost-efficient, regulation-light, and tax-optimized fund domiciles.

Fund Formation in GIFT City: Key Structures

Setting up a private equity or venture capital fund in GIFT City has become a streamlined, investor-friendly process. With the IFSCA (Fund Management) Regulations, 2022, the fund ecosystem in the IFSC now rivals global financial hubs in both agility and compliance transparency.

Eligible Structures

If you’re exploring how to set up a PE/VC fund in GIFT City, here are the core options available:

  • Authorised Fund Management Entity (FME):
     The FME is the central vehicle through which PE/VC fund activities are carried out. It must be registered with IFSCA and meet eligibility criteria related to experience, capital adequacy, and governance.
  • Registered FME non-retail:
    Registered FME non-retail can launch various fund types under IFSCA, including:
    • Open-ended or close-ended funds
    • Hedge funds
    • Venture capital (VC) funds
    • Alternative Investment Funds (AIFs) — across Category I, II, and III

This flexibility allows fund managers to structure vehicles best suited to their investment strategy.

Steps to Launch a PE/VC Fund in GIFT City

Here’s a simplified roadmap for launching your fund in GIFT IFSC:

  1. Incorporate a Legal Entity in the GIFT SEZ (typically as a Company or LLP)
  2. Register with IFSCA as a Fund Management Entity (FME) under the FME regulations
  3. Launch your fund scheme via a detailed Private Placement Memorandum (PPM)
  4. Comply with IFSCA norms on:
    • KYC/AML requirements
    • Valuation methodology
    • Custody, administration, and risk management policies

Access to Global Capital

One of GIFT City’s standout features is unrestricted access to global investors:

  • No FEMA Restrictions:
     Funds in GIFT IFSC are treated as non-resident entities, so non-resident investors can freely invest without additional RBI approvals.
  • Indian AIFs Can Invest Freely:
     GIFT-based funds are excluded from the overseas investment limits imposed by RBI, making them a preferred destination for domestic institutional capital.

This open architecture allows GIFT-based funds to pool international and Indian capital seamlessly, giving managers the flexibility to scale globally while operating from India.

Opportunities for PE/VC Players in GIFT City

As India cements its place as a global innovation hub, GIFT City is rapidly emerging as the go-to destination for private equity and venture capital funds seeking long-term, tax-efficient, and globally integrated platforms. From enabling reverse flipping of offshore entities to channeling ESG capital, GIFT IFSC offers a range of investment opportunities that are reshaping fund strategies in 2025 and beyond.

Participation in Indian Startups: Global Access, Local Advantage

GIFT City provides a robust route for global capital to participate in Indian innovation, without the constraints of FEMA or domestic AIF limits.

  • VC and PE funds based in GIFT IFSC can:
    • Invest in high-growth Indian startups with minimal regulatory friction
    • Retain foreign domicile benefits while operating in the Indian market
    • Offer global LPs easy exposure to India’s consumption-driven tech ecosystem

This makes GIFT IFSC an ideal platform to onshore Indian innovation, without compromising on global scalability.

ESG & Impact Investing: The New Frontier in GIFT IFSC

India is becoming a leader in climate tech, sustainable mobility, and inclusive finance — and GIFT City is matching this momentum with regulatory support for ESG and impact-focused funds.

  • Green bonds, climate funds, and ESG-aligned VC structures are being increasingly registered at IFSC
  • Funds benefit from:
    • Regulatory recognition
    • Favorable taxation
    • Access to global ESG investors and DFIs

This aligns with international capital mandates and opens doors for sustainable PE/VC investment opportunities in GIFT City.

Family Offices & Institutional Capital: Growing Momentum

High-net-worth individuals (HNIs) and ultra-HNIs are increasingly exploring the GIFT IFSC platform as a potential base for setting up family offices, attracted by tax incentives and the flexibility for cross-border structuring. While this use case is not yet widely operational, it represents a promising option for those looking to optimize wealth management in a globally connected environment.

Why it’s gaining interest:

  • Wealth preservation and succession planning benefits
  • Access to global financial products and strategies from within India
  • Growing institutional interest, including pension funds, sovereign wealth funds, and university endowments tapping into Indian growth via GIFT-based platforms

This shift reflects the maturing of India’s financial ecosystem, with GIFT IFSC poised to become a central hub for capital pooling and allocation. For global investors focused on cost-efficiency, tax optimization, and scalable fund structures, the opportunities emerging from GIFT City in 2025 signal a transformative phase for fund management in India.

Infrastructural Limitations (Non-Core Amenities)

From a lifestyle and operational standpoint, non-core infrastructure within GIFT City is still developing. Challenges include:

  • Limited availability of housing, restaurants, entertainment options, and international schools
  • Inadequate public transport connectivity for professionals and visiting investors

These factors make it harder to attract top-tier fund managers and global talent to physically relocate or set up operations in the city.

Delay in IP Rights Protection & Fintech Startup Recognition

Strong intellectual property (IP) protection is critical for VCs investing in tech and innovation-driven startups. However, India still faces:

  • Delays in patent and trademark registrations
  • Limited recognition of software and business method patents
  • Fintech startups seeking regulatory clarity often face inconsistent timelines for approvals and sandbox inclusion under IFSCA

These gaps hinder confidence among global VCs and institutional investors.

Key Legal & Regulatory Uncertainties

Several legal hurdles in IFSC continue to create uncertainty around fund structuring, taxation, and exits:

Stamp Duty Exemptions

  • Stamp duty implications on security transfers and restructuring involving GIFT IFSC entities needs to be streamlined further
  • Investors seek clear, centralized guidelines for tax-efficient transactions

Exit & Dispute Resolution Mechanisms

  • Absence of a dedicated commercial or arbitration court within GIFT IFSC delays enforcement of shareholder rights
  • Investors demand faster, enforceable exit strategies, especially during cross-border acquisitions or IPOs

Addressing these fund structuring issues in India is essential for scaling GIFT City into a global financial powerhouse. The groundwork is strong — but policy clarity, legal modernization, and perception correction will determine its long-term success.

Regulatory Landscape: What Fund Managers Must Know

As GIFT City cements its position as a global financial gateway, the International Financial Services Centres Authority (IFSCA) plays a pivotal role in defining a clear, agile, and globally competitive regulatory framework. For private equity and venture capital funds, understanding the evolving regulatory landscape in GIFT IFSC is essential to ensure compliance, secure licensing, and unlock the full spectrum of benefits available.

Overview of IFSCA (Fund Management) Regulations, 2022

The IFSCA (Fund Management) Regulations, 2022 are a game-changer for fund managers in India. These regulations consolidate and streamline fund formation and operations in the IFSC, creating a single, unified framework for:

  • Fund Management Entities (FMEs)
  • Schemes launched under PE, VC, hedge, or AIF formats

Key highlights include:

  • Categorization of FMEs based on risk profile and investment strategy
  • Modular licensing based on fund type and investor class (retail, accredited, or institutional)
  • Explicit recognition for ESG funds and family offices structures

Reporting Norms, Audit Standards & AML/KYC Compliance

To maintain transparency and global credibility, GIFT City funds are expected to adhere to high compliance standards:

  • Quarterly and annual reporting to IFSCA on fund performance, NAV, and investor activity
  • Appointment of independent custodians, auditors, and fund administrators
  • Robust KYC/AML policies aligned with FATF (Financial Action Task Force) norms
  • Valuation norms for listed/unlisted securities and periodic disclosures to investors

These requirements enhance investor confidence and position GIFT IFSC as a credible global fund domicile.

Licensing & Fit-and-Proper Criteria

To register as an FME in GIFT IFSC, fund managers must meet IFSCA’s fit-and-proper criteria, including:

  • Minimum capital requirement (for example: USD 5,005,000 for FME non-retail)
  • Track record in fund management or financial services
  • No history of regulatory breach or fraud
  • Adequate governance framework, including independent directors for institutional schemes

The Common Application Form (CAF) simplifies the end-to-end licensing process, integrating entity registration, FME approval, and scheme launch into a single workflow.

Proposed Reforms to Watch: Unlocking Future Potential

The regulatory roadmap for GIFT City continues to evolve. Fund managers should track these upcoming reforms aimed at further liberalizing the ecosystem:

  • Listing of Indian companies on IFSC stock exchanges, enabling access to global investors and deeper capital markets
  • Establishment of special courts/arbitration centers for efficient dispute resolution in fund-related matters
  • Participation exemption models to provide capital gains tax relief for holding companies moving to GIFT IFSC
  • Clarification on stamp duty, and exit tax scenarios during reverse flipping or M&A activity

These reforms are expected to align GIFT IFSC with global fund jurisdictions like Singapore and Luxembourg, making it easier for managers to raise and deploy capital with regulatory certainty.

Future Outlook: PE/VC in GIFT City (2025–2030)

The next five years are set to be transformative for private equity and venture capital in GIFT City. With strong policy support, tax reforms, and rising global investor interest, GIFT IFSC is poised to become a core pillar of India’s financial globalization strategy. As the market matures, fund managers can expect increased efficiency, greater access to capital, and deeper integration with India’s digital economy.

Rise in PE/VC Fund Launches Post-Tax Rationalization

The Government’s focus on rationalizing tax regimes for GIFT-based fund structures—especially exemptions on capital gains, dividends, and angel tax—is already triggering a surge in fund registrations.

  • As of end-2024, 139 Fund Management Entities (FMEs) have registered in GIFT IFSC, collectively raising over USD 14.88 billion in commitments from global and Indian LPs.
  • New proposals such as participation exemption, carry-forward of flipping losses, and streamlining of stamp duty rates  is expected to boost the volume of fund launches between 2025–2030

This sets the stage for GIFT City to become India’s flagship offshore fund jurisdiction, rivaling Singapore and Dubai.

Emerging Focus Areas: Fintech, Deeptech, Aerospace & More

The next wave of GIFT City-based investments is expected to center around high-growth, high-impact sectors, including:

  • Fintech & embedded finance platforms
  • Deeptech (AI, quantum, semiconductors)
  • Aerospace and defense-tech startups
  • Digital infrastructure, including data centers and edge computing
  • Climate tech and ESG-oriented funds

These segments align with national priorities and are attracting capital from global VCs, sovereign funds, and DFIs through GIFT-based fund structures.

Zero Tax Benefits in GIFT City: All You Need to Know

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Overview of GIFT City

What is GIFT City?

Gujarat International Finance Tec-City, commonly known as GIFT City, stands as a premier business district in Gandhinagar, Gujarat, uniquely designed to meet global standards in business and technology. This integrated development aims to position India as a global financial hub by attracting financial and IT services companies from around the world.

The infrastructure of GIFT City is tailored for high-end corporate activities, featuring world-class facilities including an advanced telecommunications network, power plants, and water management systems, all designed to provide a seamless business environment. The city’s strategic importance is enhanced by its status as an International Financial Services Centre (IFSC), which allows it to operate under special economic and regulatory conditions, offering substantial tax benefits and simplified procedures.

Comprehensive Tax Benefits in GIFT City

Income Tax Exemptions

GIFT City offers an array of enticing income tax exemptions that significantly reduce the fiscal burden on businesses operating within its precincts. Key among these is the 100% income tax exemption for eligible businesses for a period of 10 consecutive years within the first 15 years of operation. This incentive is designed to foster rapid growth and ease the initial financial challenges faced by new entrants into the market. The flexibility to select the exemption years provides businesses with the ability to strategize their financial planning to maximize tax benefits based on their revenue cycles.

Reduced Minimum Alternate Tax / Alternate Minimum Tax

For companies considering a base in GIFT City, the reduced rate of 9% MAT / AMT  are particularly compelling. While companies who have opted for beneficial taxation regime as per section 115BAA of the Income-tax Act, 1961 there is no applicability of MAT as well. However, for LLPs the 9% AMT continues to applyThis reduced MAT/ AMT  rate bolsters profitability and enhances the competitive edge for businesses operating in international financial services. 

GST and Customs Exemptions

GIFT City’s status as an IFSC also brings GST and customs duty exemptions, positioning it as a highly favorable destination for international trade and services. Services exchanged between units in GIFT City and their international counterparts are exempt from GST, which reduces operational costs significantly. Additionally, the import of goods and services into GIFT City for use in the operations of businesses is free from customs duties subject to certain conditions, making it an optimal site for companies that rely on international supply chains. These exemptions streamline the logistical and financial aspects of running a global business, allowing companies to operate with greater efficiency and reduced overhead costs.

The comprehensive tax benefits designed for businesses in GIFT City not only alleviate tax burdens but also strategically position the area as a dynamic hub for global financial services. By capitalizing on these benefits, companies can accelerate growth, maximize profitability, and enhance their competitive advantage in the global marketplace.

  • Income Tax Exemptions: Businesses enjoy a Zero-Tax i.e. 100% income tax exemption for 10 consecutive years out of the first 15 years of operation.
  • Reduced MAT / AMT rate: Entities benefit from a reduced MAT/AMT rate of 9% thereby allowing entities set up as LLP to upstream the profits further without any additional tax outflow.
  • GST and Customs Exemptions: Services between units in GIFT City and international clients are exempt from GST, and imports for business use are free from customs duties subject to certain conditions.

Other incentives

Moreover, entities engaged in the trading of specified securities on recognized stock exchanges within IFSC are exempt from Dividend Distribution Tax (DDT), further enhancing the post-tax earnings available for reinvestment or distribution to shareholders.

Sector-Specific Tax Incentives in GIFT City

Banking and Financial Services

GIFT City is strategically positioned to bolster the growth of banking and financial services with robust tax incentives. Banks and financial institutions operating within this zone benefit from income tax exemptions for 10 consecutive years, which can be claimed over any 15-year period from the date of commencement. This significant tax relief is designed to attract major global financial entities, fostering a vibrant financial services ecosystem within GIFT City.

Insurance and Reinsurance

For insurance and reinsurance companies, GIFT City offers a conducive regulatory and tax environment tailored to encourage sectoral growth. These companies benefit from a reduced effective tax rate and GST exemption on operations within GIFT City—including transactions involving reinsurance risk transfer and premium collection—making it a compelling destination for global insurers and reinsurers seeking to expand in the Asia-Pacific region. The simplified regulatory framework further enables greater operational flexibility. Additionally, Budget 2025 has proposed exemption for proceeds from policies issued by IFSC Insurance companies subject to certain conditions.

Fund Management

Fund Management Entities (FMEs) in GIFT City also enjoy substantial tax benefits. Management fees earned by FMEs from funds are eligible for a 10-year tax holiday (within a 15-year window), and such income is not subject to GST, making it highly efficient for asset managers. Moreover, non-resident investors in a Category III AIF or retail scheme based in GIFT IFSC are exempt from tax on income earned from specific securities, subject to conditions. These include income from:

  • Transfer of Indian securities (excluding shares of Indian companies)
  • Securities issued by non-residents without a Permanent Establishment in India
  • Offshore securities or specified securities traded on IFSC exchanges
  • Income from securitisation trusts taxable under “profits and gains from business”

IT and Tech Companies

GIFT City has become a hub for IT and tech firms, including startups, thanks to forward-looking tax regimes. These entities enjoy a 100% income tax exemption for up to 10 consecutive years within their first 15 years of incorporation. Additional benefits include capital subsidies and discounts on land and infrastructure as per the Gujarat IT/ITeS Policy (2022–27), fostering an ecosystem conducive to innovation and growth.

By offering these sector-specific tax incentives, GIFT City enhances India’s global competitiveness and reduces the cost of doing business, making it an attractive destination for diverse industries seeking long-term growth.

  • Banking and Financial Services: Banks and financial institutions enjoy income tax exemptions
  • Insurance and Reinsurance: Insurance entities benefit from reduced effective tax rates and GST exemptions on operations within GIFT City, enhancing the appeal for global insurance and reinsurance businesses.
  • IT and Tech Companies: Tech firms and startups are offered  income tax exemption (100% for up to 10 consecutive years out of first 15 years of incorporation), along with subsidies as per Gujarat state government’s IT/ITeS Policy (2022-27).

Long-Term Financial Impact of GIFT City’s Tax Benefits

GIFT City in India has emerged as a formidable competitor to established global financial hubs such as Singapore and Dubai, primarily due to its extensive tax benefits and strategic geographic positioning. Unlike Singapore, where corporate tax rates hover around 17%, and Dubai, known for its tax-free environment but higher operational costs, GIFT City offers a balanced proposition with zero income tax for the first 10 years and significant reductions thereafter. This makes GIFT City an attractive destination for businesses looking to maximize profitability while benefiting from a rapidly growing financial services ecosystem.

Furthermore, while Singapore and Dubai both offer robust infrastructures, GIFT City’s state-of-the-art facilities are tailored specifically for financial and tech companies, providing a cost-effective base with access to the vast Indian and Asian markets. GIFT City’s comprehensive regulatory framework is designed to facilitate ease of doing business, mirroring the regulatory benefits seen in these other financial centers but with added fiscal incentives.

How to Leverage GIFT City’s Tax Benefits

Setting Up Business in GIFT City

Establishing a business in GIFT City offers substantial financial incentives, streamlined due to a well-structured process. Here’s a step-by-step guide to setting up your company in one of India’s foremost economic zones:

  1. Determine Eligibility: Verify that your business model aligns with the sectors supported in GIFT City, such as finance, tech, or international trade.
  2. Business Registration: Initiate the process by registering your business with the GIFT City Authority. This involves submitting a detailed business plan and undergoing a due diligence process.
  3. Obtain Necessary Approvals: Depending on your business type, secure specific approvals from relevant regulatory bodies.
  4. Infrastructure Setup: Choose from ready-to-use office spaces or custom-built facilities within GIFT City, which offers world-class infrastructure tailored to the needs of high-tech companies and financial institutions.
  5. Tax Registration and Benefits Activation: Register for GST and other tax-related formalities to avail various tax exemptions and benefits.
  6. Operational Setup: With infrastructure and approvals in place, you can move towards operationalizing your business, from hiring staff to integrating IT systems.
  7. Continuous Compliance: Ensure ongoing compliance with GIFT City’s regulatory standards and guidelines, benefiting from continuous support from the GIFT City Service Bureau.

Following these steps will enable your business to leverage GIFT City’s strategic location and tax benefits, setting a strong foundation for growth and profitability.

Compliance and Legal Considerations

Setting up in GIFT City not only offers tax benefits but also requires adherence to specific legal and compliance standards:

  • Regulatory Compliance: Familiarize yourself with the IFSC Authority regulations, which are designed to be business-friendly yet ensure strict adherence to international financial standards.
  • Financial Reporting: Companies in GIFT City must adhere to international financial reporting standards, ensuring transparency and regular audits are conducted to maintain compliance.
  • Data Protection: Compliance with data protection laws is critical, especially for companies handling sensitive financial data, aligning with global standards like GDPR for European clients.
  • Anti-Money Laundering (AML) Policies: Implement robust AML procedures to prevent, detect, and report potentially suspicious transactions, which is crucial for maintaining financial integrity within GIFT City.
  • Employment Laws: While GIFT City offers flexibility in labor laws to attract international talent, companies must still comply with essential Indian employment regulations regarding wages, hours, and benefits.

Understanding and integrating these compliance and legal considerations into your business operations is vital for successful and lawful functioning within GIFT City. This strategic approach not only ensures regulatory compliance but also enhances business efficacy, contributing to a sustainable business model in one of India’s prime economic zones.

GIFT City, or Gujarat International Finance Tec-City, offers a compelling array of financial incentives designed to attract businesses and foster economic growth within its state-of-the-art infrastructure. As an International Financial Services Centre (IFSC), it provides significant tax benefits, including income tax exemptions, reduced MAT / AMT rates, and GST and customs duty reliefs. Businesses looking to establish operations in GIFT City can follow a streamlined setup process, from determining eligibility to obtaining necessary regulatory approvals and operationalizing their premises. Additionally, companies must adhere to strict compliance and legal standards, including financial reporting norms, data protection laws, and anti-money laundering policies, to ensure successful integration into this dynamic financial hub. These strategic advantages make GIFT City an attractive destination for companies aiming to expand their footprint in the Asian markets while benefiting from a competitive regulatory and tax framework.

Benefits of Setting Up a Business in GIFT City IFSC

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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

FeatureGIFT City IFSCMumbaiBengaluru
Real Estate CostsLow (affordable office spaces)High (expensive commercial real estate)High (premium locations like Whitefield)
Operational ExpensesLower (energy-efficient infrastructure)High (higher utility and maintenance costs)Moderate (higher than GIFT City)
Labor CostsCompetitive (focused on financial and tech sectors)High (competition for skilled talent)High (tech talent is expensive)
Corporate Tax Rate0% (for up to 10 years)25-30% (higher corporate tax rates)25-30% (standard tax rates)
Regulatory ProcessSingle-window clearance, simplified lawsMultiple regulatory hurdles, complex proceduresMultiple approvals, lengthy process
Global ConnectivityDirect access to global marketsHigh, but limited by complex regulationsHigh, 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.

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