GIFT City should deepen its role as gateway for global capital: Experts

At the BFSI Insight Summit 2026, experts said GIFT City must expand financial products, ease investor access and resolve tax and regulatory hurdles to attract more global capital.

Gujarat International Fin-Tec City (GIFT City) is looking to strengthen its position as a gateway for capital flowing into and out of India, with more than 65 per cent of the country’s external commercial borrowing (ECB) routed thro­ugh the international financial services centre annually.

 

The next phase of growth will depend on expanding financial products, easing access for investors and issuers, and addressing regulatory and tax-related hurdles, panellists said at the Business Standard BFSI Insight Summit.

 

“Whatever is going out of India should come back. And whatever is coming to India, GIFT City should be the gateway for that. We have also said that GIFT City should act as a gateway, both inbound and outbound. That is a pillar for us,” said Praveen Trivedi, executive director, Interna­tional Financial Services Centres Authority (IFSCA).

 

 

Trivedi said the regulator and the government were also working to simplify the process of setting up operations, including through changes to approval procedures within the special economic zone (SEZ).

 

“Today, global capital is not sufficient. If you put restrictions through tax, then it will find its own destination,” he said, underlining the importance of maintaining a framework that attracted international capital.

 

According to the panellists, GIFT City’s role in fund­raising deserved greater attention alongside its poten­tial to develop as a centre for equity and derivatives trading.

 

“If you look at this year, we have raised the maximum amount of ECB bonds for India. This is timely because India was anyway suffering a little bit of a foreign-exchange shortage,” said V Balasubramaniam, managing director and chief executive officer, NSE International Exchange.

 

The next stage of development will require GIFT City to expand beyond its existing activities and offer a wider range of products to investors and businesses. Panellists pointed to commodity trading, tokenisation, fund management, derivatives and specialised financing as potential growth areas.

 

Balasubramaniam said the proposed introduction of commodity trading could increase activity at the centre.

 

“Today, if you look at thriving financial centres like Singapore and Dubai, most of it is commodities trading. That is something that could get notified soon. If that happens, I think the scale of activity could change,” he said.

 

He also said work was under way to operationalise the framework for a direct listing of Indian companies on overseas exchanges. Announced in 2023, the framework could give Indian issuers another route to access international capital.

 

“The implementation group is working on this, and hopefully the operating guidelines will come very soon,” Balasubramaniam said, referring to the work being undertaken by the International Financial Services Centres Authority (IFSCA) and the Securities and Exchange Board of India (Sebi).

 

Suresh Swamy, partner at Price Waterhouse & Co LLP, said innovative financing structures were emerging in areas such as aircraft and ship leasing, GPU (graphics processing unit) financing and oilfield equipment.

 

“There are innovative financing structures, be it aircraft and ship leasing. There is GPU financing, which is now coming up. There is oilfield-equipment financing, which is coming up,” Swamy said.

 

He also pointed to the IFSCA’s sandbox approvals for the tokenisation of real estate and ships, as well as fintech companies working to facilitate cross-border investment.

 

“The IFSCA recently gave two separate sandbox approvals. One is for the tokenisation of real estate, a real-world asset. The second is with respect to the tokenisation of ships as well. What we also see is a lot of fintech companies trying to facilitate cross-border investment,” he said.

 

Vijay Krishnamurthy, managing director and chief executive officer, India INX, said fund management entities (FMEs) could introduce products such as exchange-traded funds (ETFs) for inbound and outbound investors. The establishment of Jio BlackRock and the launch of a fund through GIFT City were among the developments pointing to potential for further growth.

 

“We recently had Jio BlackRock set up there. They have launched a fund. From a GIFT perspective, ETFs are something we could look forward to from GIFT-based FMEs, whether inbound or outbound, and these could be marketed from the perspectives of retail and others,” he said.

 

However, he cautioned that new products alone would not be enough unless basic operational and regulatory issues were addressed.

 

“There could be other innovative products in the derivatives segment itself. A lot of things can be done and a lot of things are being done. But some of the basics need to be set right first for us to come up with a lot of innovations,” Krishnamurthy said.

 

Panellists said the centre’s ability to attract more listing and deepen investor participation would depend on resolving restrictions affecting certain market activities. One of them observed that Reserve Bank of India (RBI) rules prevented promoters of unlisted companies in India from participating in GIFT City activities.

 

He also highlighted restrictions on market-making by broker-dealer subsidiaries of Indian firms whose ultimate beneficial owner was based in India.

 

The IFSCA is working with the RBI to address these issues, he added.

 

Simplifying know-your-customer (KYC) procedures for Non-Resident Indians is another priority, as physical verification and apostille (international certification) requirements could make taking people on board cumbersome. The limited scope of the video-based investor-servicing process also meant some investors continued to face restrictions.

 

Trivedi said the regulator and the government had taken steps to reduce the compliance burden for entities setting up in GIFT City. The approval process now involves a single-window mechanism for applications relating to the IFSCA and the SEZ, while eligible entities can share office space and documentation. Fund-management entities can also launch multiple funds without seeking separate approval for each fund. The average time taken to grant a letter of approval is 15-16 days, he said.

 

Tax treatment is another factor shaping GIFT City’s attractiveness to issuers and fund managers. Panellists said eligible borrowing through GIFT City could benefit from a concessional tax rate of 9 per cent under domestic law, compared to a 20 per cent withholding tax that may apply to overseas debt raised through jurisdictions such as Luxembourg.

 

One of them also called for an outbound tax regime that would improve the competitiveness of funds operating through GIFT City. In some international fund jurisdictions, investors are taxed when distributions are made rather than each time a fund buys and sells assets within its portfolio. The absence of a comparable framework, he said, could affect returns when portfolios are churned.

 

They said regulatory coordination was important, given the different authorities involved in India’s financial system. The proposed arbitration centre could provide another differentiator, but it would need a clear offer to attract disputes. Discussion with government departments was under way, though implementation remained a work in progress.

 

The panel’s broader view was that GIFT City had made progress in attracting overseas capital and developing financial activities, but sustaining that momentum would require more than adding products. Easier access for issuers and investors, simpler approvals, tax certainty and clearer rules would be important to strengthen its role as a gateway for global capital.