Ravish Bhatt | Partner, R & D Law Chambers LLP | giftcitylawyers.com
Every conversation about GIFT City eventually arrives at the tax holiday. It is significant, and it has just been extended. But leading with the tax story misses what is structurally more durable and commercially more consequential: the regulatory architecture that GIFT City offers, and the operational reality that has been built around it.
The case for GIFT City is not primarily about what the government gives you by way of exemption. It is about what the structure of the jurisdiction allows you to do that you cannot easily do anywhere else in India, and what the combination of a single unified regulator, deemed foreign-territory status under Indian exchange-control law, and a maturing ecosystem of banks, funds, lessors, insurers and exchanges makes possible on the ground.
This article addresses that non-tax case, drawing on the regulatory framework and the verifiable operational metrics.
The Regulatory Architecture: One Regulator, One Point of Entry
The most consequential structural feature of GIFT City for any financial institution or fund manager is the simplest to state: there is one regulator.
In mainland India, a bank needs Reserve Bank of India approval, a fund needs SEBI, an insurer needs IRDAI, and a pension fund intermediary needs PFRDA. For a multinational seeking to run multiple financial-services activities under one roof, this creates overlapping, sequential, sometimes conflicting regulatory requirements. In GIFT City’s International Financial Services Centre, the International Financial Services Centres Authority (IFSCA), established on 27 April 2020 under the IFSCA Act 2019, holds the powers of all four of those regulators. Section 13 of the IFSCA Act expressly vests in IFSCA the power to exercise all powers exercisable by RBI, SEBI, IRDAI and PFRDA in relation to financial products, services and institutions within the IFSC.
This is not a coordination mechanism or a single-window interface for four separate regulators. It is a single statutory authority with unified powers, issuing unified regulations, operating a single registration system. Section 20 of the IFSCA Act separately mandates that all transactions in the IFSC be carried out in specified foreign currencies, enforcing the foreign-currency discipline that makes the IFSC operationally coherent as an international financial centre.
In five years, IFSCA has notified over 40 regulatory frameworks covering banking, insurance, capital markets, fund management, fintech, bullion, finance companies, aircraft and ship leasing, global in-house centres, and foreign universities. The pace of regulatory development is materially faster than comparable emerging jurisdictions, and the frameworks are explicitly benchmarked against Singapore, Luxembourg, Cayman and Ireland.
| What this means practically: An international bank, a fund manager, a reinsurer and a capital-markets intermediary can all establish and operate from GIFT City under a single overarching regulator, with a single registration system, without the fragmented approval processes that make mainland India structurally difficult for integrated financial services operations. |
FEMA Status: The Offshore-Onshore Distinction That Changes Everything
The second structural advantage is India’s exchange-control law. Under FEMA Notification No. FEMA.339/2015-RB dated 2 March 2015 (confirmed in RBI’s IBU Circular dated 1 April 2015), any financial institution or branch established in an IFSC is treated as a “person resident outside India” for purposes of the Foreign Exchange Management Act 1999. This is the deemed foreign-territory status that makes GIFT City operationally different from any other Indian jurisdiction.
The practical consequences are significant. An IFSC unit transacts freely in convertible foreign currency without the mandatory Authorised Dealer routing that applies to mainland cross-border transactions. Capital, returns and dividends are freely repatriable. There are no External Commercial Borrowing restrictions applicable to borrowings by IFSC entities from overseas. Foreign-currency accounts may be maintained and operated without the restrictions that apply to resident accounts. Under the FEMA Overseas Investment Rules 2022, resident Indian investors in IFSC entities benefit from liberalised conditions that do not apply to equivalent mainland investments.
This offshore status under FEMA coexists with onshore status for income-tax purposes. An IFSC fund is an Indian tax resident. This combination is unique: the entity enjoys the operational flexibility of an offshore financial institution while benefiting from India’s domestic statutory incentives, and its Indian management makes investment decisions without the place-of-effective-management risk that Indian promoters of offshore funds have historically faced.
For a fund manager running an India-focused strategy from Singapore today, the GIFT City FME structure offers a route to bring that management genuinely onshore, without triggering POEM concerns, because the IFSC entity’s Indian tax residence is not a surprise or a risk but a feature of the regime. The tax benefits flow from domestic statute, not from a treaty whose substance requirements have just been elevated by the Supreme Court.
Fund Management: A Market That Did Not Exist Five Years Ago
The growth of the fund management ecosystem at GIFT City is the most dramatic operational metric in the jurisdiction’s short history. As at December 2025, 202 Fund Management Entities were registered at GIFT City managing 313 schemes, with cumulative capital commitments of around USD 32.13 billion. As at March 2020, there were fewer than ten FMEs and commitments of less than USD 500 million. That is a roughly 60-fold increase in committed capital in five years.
The IFSCA (Fund Management) Regulations 2025, notified on 19 February 2025, replaced the 2022 framework and represent a mature regulatory offering. The framework is structured around the Fund Management Entity as the regulated entity, not the individual fund, aligning GIFT City with Luxembourg’s AIFM model and Singapore’s VCC structure. Three FME categories cover the spectrum from venture capital and private equity to retail funds and ETFs.
Recent regulatory easing has removed several friction points that limited adoption. The minimum corpus was reduced from USD 5 million to USD 3 million for both non-retail schemes and retail schemes. Private Placement Memorandum validity has been extended. Key Management Personnel appointments now require intimation rather than prior approval. Fund managers may open overseas marketing offices without prior IFSCA approval.
The Third-Party Fund Management framework, notified in July 2025, is the most significant structural development since the 2022 regulations. It allows a registered GIFT City FME to launch and manage restricted schemes on behalf of third-party fund managers who are not required to establish physical presence in GIFT City. This mirrors the platform-play model used in Luxembourg and Cayman, and removes the most common objection from international fund managers considering the jurisdiction: the requirement to build a full local presence.
| The redomiciliation option: SEBI’s 2021 circular enabled offshore funds to relocate to GIFT City through a tax-neutral one-time off-market transfer. The first such redomiciliation from Mauritius to GIFT City was completed in May 2023 by Alchemy Investment Management. This route allows an established offshore fund to migrate without triggering a taxable event, converting treaty-dependent offshore status into statute-backed IFSC status. |
Banking: A Proven Track Record
IFSC Banking Units operate as offshore branches of scheduled Indian banks and licensed foreign banks. They deal exclusively in specified foreign currencies, offer multi-currency deposit accounts, provide trade finance, dollar-denominated corporate lending, structured finance, and a full suite of derivatives products. They are not subject to the CRR and SLR requirements applicable to mainland branches.
The banking ecosystem at GIFT City includes major Indian public sector and private sector banks alongside international institutions including DBS, JP Morgan, Barclays, Standard Chartered and HSBC. IBU financing is active across corporate lending, aviation finance (approximately USD 615 million in aviation transactions executed through GIFT City IBUs as of December 2025) and trade finance for India-related cross-border transactions.
The RBI’s Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations 2026, effective 16 February 2026, expanded the definition of recognised lenders for External Commercial Borrowings to include IFSC-based branches, at principle-based, market-linked pricing. This makes GIFT City IBUs a direct channel for India’s ECB market, competing on terms with offshore lending centres.
Aircraft and Ship Leasing: From Policy to Operational Momentum
GIFT City’s aircraft leasing framework is the clearest example of a jurisdiction moving from regulatory design to operational deployment in a compressed timeframe. As of December 2025, 38 aircraft lessors are registered at GIFT City. Over 370 aviation assets worth approximately USD 5.8 billion have been leased through the IFSC, as confirmed by Gujarat Chief Minister Bhupendra Patel at the India Aircraft Leasing and Financing Summit 2.0 in May 2026, organised by the Ministry of Civil Aviation and IFSCA.
The leasing framework is built on the IFSCA (Finance Company) Regulations 2021, the Aircraft Leasing Framework (first issued 2022, updated 2025), and the Ship Leasing Framework (issued May 2022). The minimum owned-funds requirement is USD 200,000 for an operating lease entity and USD 3 million for financial leasing, which compares favourably with the capital requirements in established leasing hubs.
The Protection of Interests in Aircraft Objects (PIAO) Act 2025 is the most significant recent development for the leasing sector. It aligns India’s legal framework with the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol, providing lessors with the contractual rights and remedies that are a precondition for financing aircraft at competitive rates. Prior to the PIAO Act, the absence of Cape Town Convention alignment was the primary structural barrier preventing GIFT City from competing with Dublin and Singapore for aircraft ownership and financing, as opposed to mere registration.
| Metric | Figure | As of |
| Registered Aircraft Lessors | 38 | December 2025 |
| Aviation Assets Leased | Over 370 | May 2026 |
| Asset Value | USD 5.8 billion | May 2026 |
| IBU Aviation Financing | ~USD 615 million | December 2025 |
Insurance and Reinsurance: Structural Advantage on Indian Risk
IFSC Insurance Offices (IIOs) may write global insurance and reinsurance business in convertible foreign currency. The IFSCA (Registration of Insurance Business) Regulations 2021 govern their establishment, requiring assigned capital of USD 1.5 million for a branch IIO. GIFT City now hosts approximately 35 insurance and reinsurance entities, including major international reinsurers.
The structural advantage for GIFT City IIOs in the Indian reinsurance market is statutory, not merely regulatory. Under India’s order of preference for cession of reinsurance business, Category-2 IIOs that reinvest 100% of their retained Indian premiums domestically are accorded priority over cross-border reinsurers. This gives a GIFT City IIO a material competitive advantage when bidding for Indian reinsurance business that a Lloyd’s syndicate or Singapore-based reinsurer writing cross-border cannot replicate simply by offering better terms.
Capital Markets: The Migration of GIFT Nifty
NSE IFSC and India INX (BSE’s IFSC subsidiary) operate as international exchanges with over 140 products denominated in foreign currency. No Securities Transaction Tax, no Commodities Transaction Tax, and no stamp duty applies to transactions on IFSC exchanges.
The most significant capital-markets event in GIFT City’s history was the migration of the SGX Nifty contract from Singapore to NSE IFSC on 3 July 2023, rebranded as the GIFT Nifty. This was a deliberate regulatory decision to bring the most liquid international derivative on Indian equity indices onshore, ending the long-standing situation where the most active Nifty futures trading happened in Singapore rather than India. The migration demonstrated that with the right regulatory framework, international liquidity can be moved to GIFT City.
The IFSCA (Listing) Regulations 2024 permit direct listing of Indian public companies on IFSC exchanges, opening a new channel for Indian corporates to access international capital through a domestic regulatory framework. Cumulative debt listings on IFSC exchanges have crossed USD 67 billion, covering sovereign, corporate, green and blue bonds.
Arbitration: Significant Proposal, Not Yet Operational
One area where the GIFT City value proposition is frequently overstated requires candour. A general international arbitration centre at GIFT City has been announced and studied, but it is not yet operational as a functional institution.
The IFSCA Expert Committee on Arbitration, chaired by Dr M.S. Sahoo, submitted its report on 16 July 2024 recommending the establishment of an Alternative Dispute Resolution Centre at GIFT City, classification of GIFT-seated arbitrations as international commercial arbitrations, foreign-lawyer representation, third-party funding, and a dedicated Gujarat High Court bench for IFSC matters. These recommendations require legislative amendment to give effect and remain in progress.
What does exist is the Gujarat International Maritime Arbitration Centre (GIMAC), established under an MoU between IFSCA and Gujarat Maritime University signed on 21 June 2021, focused specifically on shipping and maritime disputes. The Singapore International Arbitration Centre maintains a representative office in GIFT City, though this is a promotional office, not a case-management centre.
For international practitioners structuring cross-border transactions from GIFT City, the honest position is that international commercial arbitration infrastructure is a work in progress. The legal framework for arbitration seated in GIFT City is available under the Arbitration and Conciliation Act 1996; what is developing is the institutional framework and track record. Contracts structured from GIFT City that require international arbitration presently reference Singapore or LCIA rules most commonly, pending the maturation of GIFT City’s own institutional offering.
Our firm’s cross-border dispute resolution and international arbitration advisory is available to GIFT City entities as a complement to the regulatory compliance and structuring work. For further details see giftcitylawyers.com.
Infrastructure and Ecosystem: The Physical Reality
GIFT City spans 886 acres in Gandhinagar, Gujarat, approximately 12 kilometres from Sardar Vallabhbhai Patel International Airport, Ahmedabad. It is India’s first operational greenfield smart city, built with district cooling, automated underground waste collection, dual-redundancy power, and fibre-optic connectivity throughout. The physical infrastructure standard is genuinely Class A by international comparison.
India’s Z/Yen Global Financial Centres Index ranking for GIFT City improved from 52nd to 46th between September 2024 and March 2025. GIFT City ranked first in reputational advantage in that index, reflecting the growing recognition by the international financial community that the jurisdiction is credible and developing.
The workforce in GIFT City has grown from a few hundred in 2015 to approximately 27,000 to 30,000 as of 2025, with an IFSCA target of 100,000 by 2030. The Gujarat GCC Policy 2025-30 targets 250 Global Capability Centres and INR 10,000 crore in investment, with GIFT City as the primary destination.
The honest qualification: residential and social infrastructure is still developing. GIFT City depends substantially on Ahmedabad and Gandhinagar for housing, schools and healthcare. For international professionals relocating to manage GIFT City operations, this is a material consideration that Singapore, Dubai or Hong Kong resolve more easily. This is a build-out in progress rather than a gap that cannot be closed.
The Honest Comparison
GIFT City is not yet Singapore. It is not yet DIFC. It does not offer the depth of secondary-market liquidity, the breadth of private banking, the centuries of common-law precedent, or the residential infrastructure that established centres do.
What it offers that those centres do not is something increasingly valuable: direct, statute-backed access to India. A fund manager in Singapore can access India through portfolio allocation and treaty-dependent tax positions that are now subject to the Tiger Global standard. A fund manager in GIFT City is managing India-linked assets from within the Indian regulatory perimeter, with statutory benefits that do not depend on treaty entitlement, with FEMA non-resident status that allows free foreign-currency operation, under a single unified regulator that is actively iterating its framework in response to market feedback.
The correct strategic framing for most international practitioners is not Singapore versus GIFT City but Singapore plus GIFT City. Many of the most sophisticated operators in the market already run that combination: offshore domicile for legacy structures and certain investor bases, GIFT City for new India-linked fund formation, operational management, and the structures where IFSCA’s statutory framework is the cleaner solution.
Our GIFT City IFSC practice advises on entity setup, IFSCA licensing across banking, fund management, insurance, capital markets and leasing verticals, FEMA compliance, fund structuring, regulatory compliance, and cross-border transactions. For further information see www.giftcitylawyers.com. For international tax, transfer pricing, APA and MAP advisory, treaty entitlement analysis and cross-border arbitration see https://rdlawchambers.com/our-services/
| Disclaimer: This article is for general informational purposes only and does not constitute legal, regulatory or tax advice. Regulatory figures and ecosystem metrics are stated as at the dates indicated and are subject to change. Readers should seek specific professional advice before acting on any matter discussed herein. |