India’s aspiration to emerge as a global financial powerhouse found its turning point in the mid-2000s. As global capital markets evolved and financial centres like London, New York, Singapore, and Dubai strengthened their dominance, India began imagining a world-class financial ecosystem of its own—one that could not only attract international players but also empower Indian investors, NRIs, and global institutions to participate in cross-border financial activity seamlessly. This long-term vision ultimately led to the birth of one of India’s most ambitious financial infrastructure projects.
The vision behind this parallel financial world
The story begins in 2007 – an important year for India’s financial modernisation. In 2007, then Chief Minister of Gujarat, Narendra Modi, announced the establishment of an International Financial Services Centre in Gujarat (IFSC) with an aim to create a world-class financial hub that could compete with other centers like London, New York, Hong Kong, Dubai, Singapore, Mauritius, etc. and the Gujarat International Finance Tec-City (GIFT City) was born. This foundational message set the tone for GIFT City’s purpose: A financial centre built inside India, but crafted to operate with the flexibility and sophistication of the world’s leading offshore hubs.
The dual ecosystem: How GIFT City was structurally designed
To bring this vision to life, GIFT City was intentionally split into two distinct zones, each serving a specific purpose within the broader financial ecosystem. GIFT City includes both Domestic Tarriff Area (DTA) and SEZ (Special Economic Zone). The SEZ area is known as GIFT International Financial Services Centre (GIFT IFSC). This dual-structure enabled GIFT City to function as both: A domestic financial district for Indian institutions, and a globally integrated financial centre through its SEZ, the IFSC. The most interesting part, however, lies in the jurisdictional structure designed to enable global competitiveness. While GIFT IFSC is located within India, it is considered as out of India jurisdiction for regulatory purposes. This single line represents one of the biggest differentiators between GIFT IFSC and the rest of India’s financial system. It is precisely this “international-within-national” structure that allows the IFSC to offer unique tax, regulatory, and capital mobility benefits.
One of India’s most powerful financial regulators: IFSCA
To ensure that the IFSC could operate with global competitiveness, it was placed under an independent regulator. The GIFT IFSC is regulated by an independent regulator International Financial Services Centre Authority (IFSCA) to develop and regulate the financial services market in the IFSC. The regulator has actively pushed for faster approvals, smoother compliance, and wider participation from global and NRI investors. This coordinated effort is visible in the rapid growth of entities within the IFSC.
There has been a great push by the regulator as well as the government of India to promote GIFT IFSC as well as interest from NRIs or PIOs or OCIs to use GIFT IFSC to invest in India or globally. As of March 31, 2025, 29 banks, 83 broker/dealer, 161 Fund Management, 229 AIFs/Schemes have been registered. In addition, 5 payment service providers, 33 aircraft leasing entities, 24 ship leasing entities, 45 Insurance and Insurance Intermediaries, 91 Ancillary service providers and others with a total of 865 have already registered with IFSCA with more than 25% got their registrations approved in last 1 year.
These registrations highlight the scale: aircraft leasing, ship leasing, bullion trading, fund management, banks, and financial intermediaries, forming a vibrant and expanding financial economy.
A parallel financial system: How business works inside GIFT IFSC
One of the biggest distinctions between the IFSC and the rest of India is its currency framework. In GIFT IFSC, the transactions take place in any currency except INR. This unique freedom positions GIFT IFSC as a hub for global capital operations, similar to international financial centres like Singapore or Dubai. Supporting this global framework are several regulatory and tax concessions. A lot of benefits and concessions in income tax, GST, Stamp Duty, FEMA, SEBI, etc. are available for entities established in GIFT IFSC and to investors using GIFT IFSC to invest in various financial securities. These benefits directly enhance the attractiveness of GIFT IFSC to both institutions and investors.
Investment avenues within GIFT IFSC
GIFT IFSC is not a single-utility zone; it is a multi-layered financial marketplace with varied investment avenues. Below is a structured view of these options using your content exactly as given.
- Bank fixed deposits
Any PROI (NRI or OCI or PIO or Foreigner) can open a bank account and invest in any deposit accounts – including GIFT CITY fixed deposits – with any banks set up in GIFT IFSC. The interest rates are not regulated and the banks are allowed to keep interest rate as per the situation, circumstance, interest rate environment, internal demand/supply of foreign exchange. The deposits can be created for 7 days to even 10 years. The RBI cap limit for interest and tenure related to FCNR deposit account does not apply to the banks in IFSC. This makes IFSC banking one of the most flexible NRI banking options available globally.
- Trading on IFSC exchanges
There are mainly 3 exchanges in GIFT IFSC: IndiaINX (of BSE), NSE IX (of NSE) and IIBX (Bullion Exchange). Gain or loss on securities listed on these exchanges are not subject to income tax in India. As currently, only derivatives are listed on these exchanges, the income would be in the nature of business income and there is a income tax exemption for income earned (for 10 years in a block of 15 years) by entities set up in IFSC. This offers a tax-efficient environment for trading derivatives and bullion at the international level.
- India-bound funds
For inbound investing, various funds have been set up are in the process of being set up. They can mainly be categorized as master fund, feeder fund or retail fund. The retail fund has not been active yet. The feeder fund is used by existing MF, PMS or AIF players to feed the funds raised through GIFT IFSC fund into their existing funds. Master funds are the funds that directly invest or trade in securities listed in India. Any non-resident (NRI, PIO, OCI, Foreigner) is allowed to invest in any India bound fund. However, an Indian resident is not allowed to invest in such funds. This structure makes GIFT IFSC a gateway for global investors into Indian markets.
- Global investment options
An NRI or PIO or OCI can invest in funds that invest globally and are registered in GIFT IFSC. Indian residents can also invest out of India through a global access platform available in GIFT IFSC under LRS. The regulations relating to Global Access are being updated and currently, a consultation paper has been issued recently. The revised regulations are expected to come out in 3-6 months. This expands the IFSC’s scope beyond India-linked assets to global financial participation.
- Real estate
All immovable properties in GIFT City are available on lease hold basis for 99 year. Many Investors are also looking for investments in residential or commercial properties on the long-term lease basis. The long-term lease model is designed to maintain regulatory oversight while encouraging real estate participation.
ExpertNRI, a leading GIFT City investment consultant in India, helps NRIs, OCIs, and global investors navigate banking, funds, taxation, and regulatory rules within the IFSC. Their advisory ensures compliant, well-structured participation across India-bound and global investment opportunities.
GIFT IFSC stands today as one of India’s most forward-looking financial initiatives – a hub built to operate on global principles while remaining rooted in Indian soil. With independent regulation, international currency operations, tax incentives, global investment access, inbound and outbound fund structures, and a rapidly expanding ecosystem of banks, exchanges, leasing companies, funds, and intermediaries, the IFSC represents India’s push toward becoming a true global financial force.
