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

Last Updated on: 11th April 2025, 06:31 pm

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:

Step	Estimated Timeline	Cost (Approx.)
Entity Registration	10–15 days	₹10,000–₹25,000 (RoC & legal fees)
Office Space Allotment	1–2 weeks	₹135–₹140/sq ft/month (varies by developer)
SEZ Unit Approval	2–4 weeks	₹5000 initially and ₹25000 for acceptance of LOA (No govt fees)
IFSCA Registration	4–8 weeks	Based 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.