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

Last Updated on: 11th April 2025, 06:09 pm

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

Exchange	Parent Entity	Key Products
NSE IFSC	National Stock Exchange (NSE)	GIFT Nifty, currency derivatives, commodities
India INX	Bombay 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 Type	Tax 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.

Feature	GIFT IFSC	NSE/BSE (Mainland India)
Regulator	IFSCA (Unified regulator for IFSC)	SEBI, RBI, IRDAI, PFRDA
Currency	USD-denominated trading	INR-denominated trading
Trading Hours	20+ hours/day (global overlap)	9:15 AM – 3:30 PM IST
Taxation	No STT, CTT, stamp duty0% capital gains tax for non-residents	STT, CTT, stamp duty applicableCapital gains tax applies
Compliance	Low 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.