Why International Companies Are Choosing India’s International Financial Services Centre (IFSC)
| Authored by R & D Law Chambers LLP | Practice led by Ravish Bhatt, Dual-qualified lawyer (India and England & Wales) | Bar Council of Gujarat, Enrolment G/504/2008 | SRA (non-practising) Registration No. 492 477 | ADIT, Chartered Institute of Taxation, LondonPublished: 3 August 2026 | Last reviewed: 3 August 2026 | Estimated reading time: 15 minutes |
| This article states the position as at 3 August 2026. Figures are attributed to their source in line and are the most recent published at the date of writing. IFSC data is published quarterly by IFSCA and monthly by GIFT City; check the current figures before relying on them commercially. |
The Short Answer
| GIFT City is India’s only International Financial Services Centre. It offers global businesses a unified regulator, foreign currency operations, internationally oriented financial regulations and a substantial tax holiday under section 80LA. It is particularly attractive for banks, fintech companies, investment funds, insurers, aircraft and ship leasing companies, treasury centres and multinational corporations expanding into India and serving global markets. Its distinctive advantage is as a bridge between international capital and the Indian economy, which is also the limit of that advantage: where a transaction has no India nexus, GIFT City competes on parity with Singapore or Dublin rather than superiority. |
Executive Summary
For decades, international businesses establishing regional financial hubs considered London, Singapore, Dubai, Hong Kong or Luxembourg. Another destination is now drawing serious attention.
Located in Gujarat, GIFT City hosts India’s only International Financial Services Centre, created to attract global financial institutions, multinational corporations, investors, fintech innovators and international service providers. It operates under the unified oversight of the International Financial Services Centres Authority, established under the IFSCA Act 2019, which since 1 October 2020 has exercised within the IFSC the powers otherwise held by the Reserve Bank of India, SEBI, IRDAI and PFRDA.
GIFT City is no longer viewed merely as a tax-efficient jurisdiction. It is becoming a comprehensive international business ecosystem. Whether you are a UK investment fund, a US fintech company, a European insurer, a Middle Eastern family office or an Asian multinational, the opportunities extend well beyond tax.
This guide explains where those opportunities lie, who benefits, what the numbers actually show, and why legal planning matters before you commit.
Why Is GIFT City Becoming a Global Business Destination?
Imagine you run a multinational financial services company. You want to expand into one of the world’s fastest-growing economies while retaining access to global capital markets. You want a modern regulatory environment, international financial infrastructure, foreign currency operations, efficient cross-border transactions and access to India’s economy.
That is the proposition. Three features distinguish the IFSC from mainland India.
A single regulator
Under sections 12 and 13 of the IFSCA Act 2019, IFSCA develops and regulates financial products, services and institutions in the IFSC and exercises the powers of four separate regulators within it. A bank, an insurer and a fund manager in the IFSC deal with one authority rather than three, through a single application route, the Single Window IT System.
Deemed-foreign status
An IFSC unit is treated as a non-resident under the foreign exchange regime. It transacts in freely convertible foreign currency, holds foreign-currency accounts, and is largely outside the exchange-control friction that applies on the mainland. The Foreign Currency Settlement System, launched in October 2025, allows IFSC Banking Units to settle foreign currency transactions locally, reducing reliance on correspondent banking.
A substantial and recently extended tax holiday
Section 80LA of the Income-tax Act gives a qualifying IFSC unit a 100% deduction on eligible business income for any 20 consecutive years out of 25, extended from the earlier 10-out-of-15 window by the Finance Act 2026, with income taxed at a flat 15% once the holiday ends. Around it sit MAT and AMT at 9%, GST zero-rating on services to overseas clients and on inbound supplies for authorised operations under section 16 of the IGST Act, customs-duty exemption on imports into the SEZ, and Gujarat stamp-duty relief.
What the Numbers Show
Interest in GIFT City is now measurable rather than aspirational.
| Measure | Position | As at |
|---|---|---|
| Registered entities in GIFT IFSC | More than 1,034 | Late 2025 (Press Information Bureau) |
| Banking assets | USD 106.7 billion, from USD 14 billion in September 2020 | February 2026 (GIFT City) |
| Banks operating IFSC Banking Units | 37, comprising 20 foreign and 17 domestic | February 2026 (GIFT City) |
| Cumulative fund commitments | Approximately USD 39 billion | March 2026 (IFSCA data) |
| Registered Fund Management Entities | 217, up from 202 in December 2025 | March 2026 |
| Registered fund schemes | 360, up from 327 in December 2025 | March 2026 |
The banking figure is the clearest signal: a more than sevenfold increase in five and a half years. Leading global banks including DBS, Credit Agricole, Deutsche Bank, Citi, HSBC, JP Morgan, MUFG, Mizuho, Societe Generale and Standard Chartered have established a presence, alongside major Indian banks. During 2025 alone, Qatar National Bank, First Abu Dhabi Bank, Mashreq Bank, Natixis, CTBC Bank and Bank of Maharashtra set up IFSC Banking Units.
Fund management is the fastest-expanding vertical. Category III alternative investment funds accounted for USD 21.44 billion of commitments as at March 2026, roughly 55% of the total, across 208 of 334 schemes, with a substantial pipeline of commitments not yet drawn down.
Top Opportunities for Global Businesses in GIFT City
1. International banking
International banks establish International Banking Units to provide trade finance, corporate lending, syndicated loans, treasury services, foreign currency banking and cross-border financing. The unified regulatory framework, the foreign currency ecosystem and the local settlement system introduced in October 2025 make the IFSC attractive for banks serving international clients from an Indian base.
2. Investment funds and asset management
Fund managers use GIFT City for alternative investment funds, venture capital, private equity, family office structures, portfolio management and international wealth management, under the IFSCA (Fund Management) Regulations.
A point of structural importance is often missed. Funds established in the IFSC remain Indian tax residents and are governed by India’s tax treaties, but the IFSC regime provides domestic-law incentives that can be more favourable than treaty benefits. Under section 90(2) of the Income-tax Act, a taxpayer may rely on whichever of domestic law or the treaty is more beneficial. Relying on a domestic-law exemption rather than invoking a treaty reduces exposure to treaty-benefit denial under GAAR or the principal purpose test, which is a meaningful risk-management point rather than merely a rate comparison.
3. FinTech and digital financial services
FinTech businesses need a regulatory environment that permits innovation while maintaining compliance. The IFSC ecosystem supports cross-border payments, digital banking, WealthTech, InsurTech, RegTech and technology-led financial services, and IFSCA operates a regulatory sandbox permitting live testing under relaxed conditions for a defined period. Activities involving digital assets remain subject to the applicable regulatory framework and should not be assumed permissible without checking.
4. Aircraft and ship leasing
Leasing is among the fastest-growing verticals. Aircraft leasing was the first mover, supported since 2025 by a purpose-built domesticating statute, the Protection of Interests in Aircraft Objects Act 2025, which implements the Cape Town Convention. Ship leasing followed under the Framework for Ship Leasing of 16 August 2022, and the May 2026 amendment to the Finance Company Regulations added a Special Purpose Vehicle route administered by Trust and Company Service Providers, expected to support both.
Our detailed guide to the ship leasing regime, including capital requirements and the operating-versus-financial lease distinction, is available here.
5. Global treasury centres
Multinational corporations are reassessing where they manage cash flow, currency exposure, international liquidity and cross-border financing. Global or Regional Corporate Treasury Centres are a recognised activity in the IFSC, and a November 2025 amendment to the Companies (Meetings of Board and its Powers) Rules extended the section 186 exemption previously available to RBI-registered non-banking financial companies to IFSCA-registered Finance Companies conducting lending and treasury-centre activities, removing a specific corporate-law friction point.
6. Insurance and reinsurance
Insurers and reinsurers register under the IFSCA (Insurance) Regulations to write offshore risk, operate reinsurance and captive structures, and offer specialty products, with capital and solvency treatment aligned to international standards.
7. Global Capability Centres
Beyond financial institutions, multinationals are evaluating GIFT City for Global Capability Centres supporting finance, risk management, analytics, compliance, technology and shared services, combining skilled talent with an internationally oriented business environment.
Industries That Can Benefit Most
Banking; FinTech; asset management; private equity; venture capital; insurance and reinsurance; aviation leasing; maritime leasing; wealth management; family offices; capital markets; technology; and professional and advisory services.
An Honest Word on Where the Advantage Actually Lies
GIFT City’s sharpest and least replicable advantages tend to involve at least one Indian leg in the transaction: inbound withholding relief, FEMA simplification, proximity to Indian counterparties and access to the Indian market. For a business whose transactions have no India nexus at all, GIFT City achieves parity with Singapore, Dublin or the DIFC at best, not superiority.
That is not a criticism of the jurisdiction. It is a description of what it was designed to be: a bridge between international capital and the Indian economy. Two advantages survive that framing and are genuinely international-facing. Certain funding-side exemptions improve an IFSC entity’s position as an international borrower regardless of counterparty. And there is an onshoring arbitrage for Indian promoters, who can obtain broadly comparable tax treatment to an offshore structure while keeping the entity, the jobs and the intellectual property in India.
Businesses that understand this choose GIFT City for the right reasons and structure accordingly. Businesses that do not tend to arrive expecting an offshore centre and are surprised by the substance requirements.
Why Legal Planning Matters
Many businesses assume that entering GIFT City is a registration exercise. It is not. It is a legal, regulatory, tax and commercial structuring exercise, and the sequence matters.
Successful entry requires consideration of entity structure, regulatory approvals, IFSCA licensing requirements, commercial contracts, employment documentation, data protection and cyber requirements, tax planning, FEMA considerations, intellectual property and dispute resolution. Early advice builds structures that support expansion rather than requiring costly restructuring later.
| The three gates. The clearest way to hold this is as three separate gates, each with its own authority and conditions. An IFSCA activity licence permits the financial activity. Incorporation under the Companies Act, with the IFSC-specific exemptions in the two Ministry of Corporate Affairs notifications of 4 January 2017, governs corporate compliance. Section 80LA of the Income-tax Act governs tax entitlement. Clearing one gate does not clear the others. Assuming that an IFSCA licence automatically carries Companies Act relief, or that incorporation in the IFSC automatically secures the tax holiday, is the most common structuring error we see. |
How R & D Law Chambers Supports Global Businesses
For international businesses, entering GIFT City involves more than incorporating an entity. It requires aligning legal strategy with commercial objectives, and designing structures that survive a tax audit, a GAAR review, a FEMA inquiry or an investor dispute, not merely structures that secure initial approval.
The firm assists with GIFT City legal advisory, business structuring, regulatory compliance, commercial contract drafting, cross-border transactions, international arbitration, corporate governance, investment documentation, dispute resolution and ongoing legal support. The practice combines ADIT-level international tax depth with dual India and England-and-Wales qualification and cross-border arbitration experience.
Related advisory
- Fund Structuring in GIFT IFSC, legal, tax and regulatory design for funds and managers.
- Regulatory & Compliance Advisory in GIFT IFSC, licensing, governance and continuing obligations.
- Fund Documentation & Legal Structuring for FMEs, PPMs, trust deeds and management agreements.
- Transaction & Contractual Advisory in GIFT IFSC, cross-border agreements and transaction documentation.
- International & Domestic Arbitration, dispute resolution for IFSC transactions.
- International Taxation & Cross-Border Tax Planning, treaty analysis and GAAR-resistant structuring.
Frequently Asked Questions
What is GIFT City and how does it differ from mainland India?
GIFT City hosts India’s only International Financial Services Centre, established within a Special Economic Zone under section 18 of the SEZ Act 2005. It is regulated by IFSCA, which under section 13 of the IFSCA Act 2019 exercises within the IFSC the powers otherwise held by the RBI, SEBI, IRDAI and PFRDA. An IFSC unit is treated as a non-resident under the foreign exchange regime, transacts in freely convertible foreign currency, and can access tax incentives unavailable on the mainland, including the section 80LA holiday.
How large is the GIFT City ecosystem?
More than 1,034 entities were registered in GIFT IFSC as at late 2025. Banking assets crossed USD 106.7 billion by February 2026, more than seven times the USD 14 billion recorded in September 2020, across 37 banks operating IFSC Banking Units. Cumulative fund commitments reached approximately USD 39 billion by March 2026, with 217 registered Fund Management Entities and 360 fund schemes.
What tax benefits does an IFSC unit receive?
A qualifying IFSC unit can claim a 100% deduction on eligible business income under section 80LA of the Income-tax Act for any 20 consecutive years out of 25, extended from 10-out-of-15 by the Finance Act 2026, with income taxed at a flat 15% after the holiday. MAT and AMT apply at 9%. Services to overseas clients and inbound supplies for authorised operations are zero-rated under section 16 of the IGST Act, and imports into the SEZ are exempt from customs duty. Entitlement depends on satisfying the statutory substance and commencement conditions, not merely on being incorporated in the IFSC.
Which businesses are best suited to GIFT City?
Banks, fund managers and alternative investment funds, insurers and reinsurers, fintech businesses, aircraft and ship leasing companies, global treasury centres, wealth managers and family offices, capital markets intermediaries and Global Capability Centres. GIFT City is designed for eligible international financial services and related activities, and is not a general-purpose corporate jurisdiction.
Do foreign companies need Indian legal advisers to enter GIFT City?
In practice, yes. International advisers understand the home-jurisdiction position, but the IFSC regime is a matter of Indian law: the IFSCA Act and regulations, the SEZ Act as modified for the IFSC, the Companies Act with its IFSC exemptions, the Income-tax Act and FEMA. Advice on licensing, documentation, substance and compliance obligations requires Indian counsel.
Is entering GIFT City just a registration process?
No. Registration is one of three separate gates. An IFSCA licence permits the activity; incorporation under the Companies Act with the IFSC exemptions governs corporate compliance; and section 80LA governs tax entitlement. Each has its own conditions and its own authority, and clearing one does not clear the others. Structures built on the assumption that they are a single gate are the ones that encounter difficulty later.
Conclusion
GIFT City is no longer simply an ambitious government initiative. It is an operating financial ecosystem where international businesses establish operations, access global capital, serve cross-border clients and participate in India’s expanding economy. The numbers, particularly in banking and fund management, show an ecosystem that has moved past its pilot phase.
For banks, fintech companies, investment funds, insurers, leasing businesses and multinational corporations, the opportunities are real. But the businesses that benefit most are rarely those that move fastest. They are the ones that understand what the jurisdiction is designed to do, structure for substance rather than for the incentive alone, and treat regulatory approval and fiscal entitlement as the separate questions they are.
| This article is for general information as at 3 August 2026 and is not legal advice. Laws, regulations and regulator practice evolve. Seek jurisdiction-specific advice before acting. www.giftcitylawyers.com is an informational microsite owned and operated by R & D Law Chambers LLP. It is not affiliated with or endorsed by GIFT City, the International Financial Services Centres Authority, or any government or regulatory authority. |