Over 65% ECBs worth $18 billion routed via GIFT-IFSC in FY26 so far

Experts say simpler rules, tax benefits aid GIFT City's emergence as preferred jurisdiction

Nearly two-thirds of external commercial borrowings (ECBs) booked so far in the ongoing financial year have been routed through GIFT City, a sharp rise from 36 per cent recorded in FY25.

 

Data from the Reserve Bank of India (RBI) shows that total ECBs raised between April and December 2025 stood at $27.5 billion. Of this, $18 billion was routed via the International Financial Services Centre (GIFT-IFSC), according to data shared by GIFT City officials.

 

“With the progressive expansion of IFSC banking units (IBUs), entry of leading global banks, and a stable regulatory and tax framework, GIFT IFSC has moved from being an alternative channel to an increasingly preferred jurisdiction for ECB intermediation,” said Sanjay Kaul, managing director and Group Chief Executive Officer, GIFT City.

 

 

As of December 2025, the cumulative value of ECBs booked through GIFT-IFSC stood at $55.7 billion, officials said.

 

There were 35 IBUs operating in the financial hub as of September 2025, comprising both Indian and foreign banks. Their cumulative assets stood at around $100 billion till the second quarter of FY26. The IBUs function as offshore banking branches and lend in foreign currencies such as the US dollar, euro and pound sterling to Indian companies.

 

“This rising share reflects multiple structural advantages, including competitive cost of funds, operational efficiency, reduced reliance on offshore financial centres, and the presence of globally active banks offering sophisticated treasury and cross-border financing solutions,” Kaul added.

 

Experts attribute the growing traction to the expansion of the borrower base, alongside easier compliance and disclosure requirements. They added that corporates now find it simpler to raise funds via GIFT City than through traditional offshore jurisdictions such as London, Luxembourg, Hong Kong or Singapore.

 

“An interesting point is on the raising of the ESG bonds – green, social, sustainable and sustainability linked – which has seen around $16 billion raised so far. This has been possible by the regulator recognising globally accepted taxonomies for such issues. Recognising globally accepted taxonomies has led to investors and investees obtaining clarity on the requirements and compliances of such taxonomy that the investors are comfortable with,” said Pradeep Ramakrishnan, executive director, International Financial Services Centres Authority.

 

The RBI regulates the ECB loan framework under the Foreign Exchange Management Act, 1999 (FEMA). ECBs are a key funding avenue for eligible Indian entities seeking access to overseas capital.

 

Experts noted that fund-raising through GIFT City comes with significant regulatory relaxations, helping the destination emerge as a preferred choice.

 

“Entities which have set up units in GIFT City can raise funds from non-resident lenders without any FEMA restrictions as the ECB regulations do not apply to such fund-raises. Additionally, any interest paid by the GIFT units is also exempt from Indian tax for the non-resident lenders. Typically, Indian borrowers would need to bear the tax costs of such borrowings in order to sweeten the deal for foreign lenders. This cost is reduced significantly when raising funds through GIFT City,” said Surajkumar Shetty, partner, JSA Advocates & Solicitors.

 

Tax experts added that the 10-year tax holiday benefit applies to interest payable on borrowings, implying no tax incidence and, consequently, no withholding tax on interest payments for ECBs raised via GIFT City.

 

“This is a major benefit compared to the withholding rates ranging from 20 per cent to 35 per cent for interest on ECBs in India outside GIFT City. The government has now further increased the tax holiday for units in GIFT City for a period of 20 consecutive years out of a block of 25 years in the Union Budget 2026, which will further enhance ECBs as well as other investments in GIFT City,” said S R Patnaik, partner (Head–Taxation), Cyril Amarchand Mangaldas.

 

Earlier this week, Piramal Finance secured a $400 million ECB facility from a consortium of international and Indian banks. Earlier in 2025, companies such as Indian Railway Finance Corporation and NTPC also secured or signed agreements for ECB loans through GIFT City.