What is GIFT City IFSC? The Offshore Within India Concept
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GIFT City’s IFSC (International Financial Services Centre) is best understood as a “separate country within India” for financial purposes. Located in Gandhinagar, just 30 km from Ahmedabad, the IFSC zone operates under a fundamentally different set of rules than the rest of India.
Before diving into the specifics of how IFSC works, you may want to read our complete guide to GIFT City for the broader context, including history, architecture, and master plan.
While Singapore, Dubai, and the Cayman Islands are geographic jurisdictions with their own governments, GIFT City IFSC achieves something similar through regulation: it creates an offshore financial space within India where global financial services operate as if they were outside the country. This is why the IFSCA (International Financial Services Centres Authority) calls it an “onshore-offshore” financial centre.
The key insight: you can headquarter a global financial business in India, serve international clients in foreign currencies, and benefit from regulatory treatment equivalent to offshore operations, all while being physically located in Ahmedabad. This is what makes GIFT City unique.
GIFT City’s Two Zones: DTA vs. IFSC/SEZ
To understand how GIFT City operates like a separate jurisdiction, you need to know about its two distinct zones:
The Domestic Tariff Area (DTA)
The DTA functions under standard Indian law. Companies here:
– Operate under RBI and SEBI regulation (as normal)
– Conduct business in Indian Rupees (INR)
– Follow Indian tax rules and comply with GST
– Serve primarily the domestic Indian market
– Deal with Indian exchange control requirements
The Multi-Services SEZ with IFSC Status
The IFSC zone is the “offshore within India” space. Companies here:
– Operate under IFSCA regulation (unified regulator)
– Must transact in foreign currencies (not INR, except for employee salaries and local expenses)
– Follow a different tax regime (Section 80LA, no GST between units, no STT, no stamp duty)
– Serve international clients and cross-border financial transactions
– Are treated as non-resident entities for FEMA (Foreign Exchange Management Act) purposes
This boundary matters. GIFT City is an 886-acre multi-service SEZ with approximately 60% in the IFSC zone and the remainder in the DTA zone. If a company wants to access India’s offshore status, it must operate in the IFSC zone.
How the IFSC Functions as a Separate Jurisdiction
1. Foreign Currency Requirement
In GIFT City IFSC, all financial transactions must occur in foreign currency. This is not optional. Permitted currencies include the US Dollar, Euro, Japanese Yen, British Pound, and over 10 others.
The fundamental purpose of the IFSC is to facilitate cross-border financial transactions without the Indian Rupee as an intermediary. When transactions happen in foreign currency, India’s Foreign Exchange Management Act treats them differently. Entities are classified as “non-resident” for FEMA purposes, meaning standard Indian exchange control requirements don’t apply.
This is why an IFSC Banking Unit can accept deposits in USD from overseas clients without routing through India’s traditional banking channels.
2. IFSCA as the Unified Regulator
GIFT City IFSC operates under IFSCA, established under the International Financial Services Centres Authority Act, 2019, and operationalized on April 27, 2020. IFSCA is not a typical Indian regulator. It’s a unified authority.
Normally, banking falls under the RBI, securities under SEBI, insurance under IRDAI, and pensions under PFRDA. IFSCA combines all these powers into a single regulator. Why? Because financial services in an offshore jurisdiction require integrated oversight. One banking unit might also act as a custodian (which would involve SEBI-type regulation) or set up a fund (PFRDA-type oversight). A unified regulator avoids bureaucratic delays and coordination problems.
IFSCA headquarters is located in GIFT City itself, ensuring fast regulatory decisions and deep knowledge of the operational environment.
3. Non-Resident Treatment Under FEMA
IFSC units are treated as non-resident entities for Foreign Exchange Management Act purposes. In practice, this means:
– Capital can be transferred to any country without RBI approval (beyond routine compliance)
– Repatriation of profits to parent companies or shareholders abroad is simplified
– Transactions between IFSC units and offshore entities are treated as foreign-to-foreign, not cross-border India transactions
An IFSC Banking Unit can lend to an overseas company, accept payments in USD, and transfer funds globally as easily as if it were operating in London or Singapore. The “offshore within India” concept becomes operational through this FEMA treatment.
Who Can Operate in GIFT City IFSC?
As of November 2025, 1,034 entities operate in GIFT City, including 35 banks, 52 insurance firms, 150+ capital market intermediaries, 133 fintech companies, 194 fund management entities, and 30+ aircraft and ship lessors.
Here are the major categories:
IFSC Banking Units (IBUs)
An IBU is equivalent to an overseas branch. Indian and foreign banks already licensed in India can establish an IBU to provide:
– Cross-border lending (ECB, RCF, and other structures)
– Trade finance (letters of credit, guarantees, buyer’s credit)
– Investment banking and treasury services
– Deposit-taking from non-resident individuals and corporates
As of 2025, 28 IBUs operate in GIFT City, collectively holding over USD 1 billion in deposits.
Major banks with IBUs include Axis Bank, HDFC Bank, ICICI Bank, SBI, Kotak Mahindra Bank, and IndusInd Bank.
Insurance Offices
Insurance companies can establish IFSC units to underwrite global risks and provide coverage across borders. They operate under IFSCA’s insurance regulation, which harmonizes Indian regulations with international standards.
Capital Market Intermediaries
Stockbrokers, investment advisors, and custodians can operate in GIFT City to facilitate global securities trading, derivatives, and fund management.
Fund Management Entities
Asset management companies and investment funds can set up in GIFT City to manage portfolios, including Alternative Investment Funds (AIFs), which invest in startups, real estate, or private equity across borders.
Fintech and Ancillary Services
Global Capability Centres (GCCs) are international service centres operated by global firms that can set up in GIFT City. Banks also establish fintech units for blockchain, payment systems, and digital assets.
Aircraft and Ship Leasing
Leasing companies establish special-purpose entities in GIFT City to finance large capital assets for global operators.
IFSCA: The Unified Regulator
To truly understand GIFT City’s status as a separate jurisdiction, you need to understand IFSCA.
The International Financial Services Centres Authority (IFSCA) was created because traditional Indian regulation (RBI for banking, SEBI for securities, IRDAI for insurance) wasn’t designed for cross-border financial services. Each regulator has different rule books, different procedures, and different timelines.
IFSCA consolidates all regulatory powers. It:
– Issues banking licenses and oversees IBUs
– Supervises insurance underwriting and reinsurance
– Regulates securities trading and capital market services
– Approves fund management activities
– Licenses fintech platforms
– Coordinates with international regulators in other IFSCs (Singapore, Dubai, Cayman Islands)
This unified approach has a practical benefit: IFSCA can approve new financial products, licenses, and structures in weeks rather than months. If a global fintech wants to launch a USD-denominated payment system, IFSCA can review, approve, and supervise it without the traditional RBI-SEBI-IRDAI coordination delays.
India INX and NSE IFSC: The two exchanges
GIFT City is home to two stock exchanges, both operating in the IFSC zone:
India INX (India International Exchange)
India INX was inaugurated on January 9, 2017, and commenced trading operations on January 16, 2017. It is India’s first international exchange, operating 22 hours daily to cover most global financial trading hours.
Products include:
– Index and single-stock derivatives (Sensex, Nifty futures)
– Commodity derivatives
– Currency derivatives
– Debt securities in USD and other foreign currencies
In 2025, India INX launched advanced mobile trading platforms and expanded its product range to include USD-denominated indices, making it accessible to global investors.
NSE IFSC (National Stock Exchange International Exchange)
NSE IFSC is a separate entity from the main National Stock Exchange. It was incorporated on November 29, 2016, and commenced operations on June 5, 2017. It operates under SEBI’s international exchange framework and focuses on:
– US stock receipts (trading 50 US stocks via Unsponsored Depository Receipts)
– GIFT Nifty (offshore trading of Indian Nifty index, launched July 2023)
– Global investor access to Indian equities
NSE IFSC operates during US market hours (7 PM to 1:30 AM IST) and eliminates Securities Transaction Tax (STT) and stamp duty, making it cost-competitive with US exchanges.
Both exchanges enable global investors to trade without currency conversion, reducing costs and settlement time.
Tax Regime: What Makes GIFT City Attractive
GIFT City IFSC offers what is arguably Asia’s most aggressive tax incentive structure. For a detailed breakdown, see our article on GIFT City tax benefits.
Section 80LA Tax Holiday
IFSC units can claim 100% exemption on business income for any 10 consecutive years out of the first 15 years of operation. After that, they may qualify for alternate periods.
This is extraordinarily valuable. A financial services company earning USD 10 million annually in GIFT City would pay zero income tax during the 10-year holiday period, whereas a similar company in Singapore would still pay 5% corporate tax.
No GST Between Units
IFSC units do not pay GST on services provided to other IFSC units or offshore clients. This eliminates cascading tax and reduces operational costs.
No STT, stamp duty, or CTT
Securities Transaction Tax (STT), commodity transaction tax (CTT), and stamp duty are eliminated for IFSC transactions. This makes GIFT City exchanges cost-competitive with London, Singapore, and New York.
9% fallback tax
In years when IFSC units don’t claim Section 80LA benefits, they can pay Minimum Alternate Tax (MAT) at just 9% on book profits. This is lower than India’s standard 22% corporate tax and competitive with Middle East financial centres.
Extended Validity
The 2025 Budget extended the tax holiday period from 2027 to March 2030, signaling long-term government commitment to the IFSC.
Setting Up in GIFT City IFSC: The Process
Step 1: Determine Regulatory Approval
Different entity types require different regulators:
– Banking units need RBI approval (via IFSCA)
– Insurance entities need IRDAI approval (via IFSCA)
– Capital market firms need SEBI approval (via IFSCA)
– Fund management entities need IFSCA approval
– GCCs and fintech need IFSCA approval
Step 2: Secure IFSCA Licensing
Submit an application to IFSCA with:
– Detailed business plan describing cross-border activities
– Financial statements proving net worth and track record
– Regulatory compliance history
– Risk management and governance framework
You can also access GIFT City through shared office spaces and coworking facilities while you establish your full operations.
Step 3: Infrastructure and Compliance
Once licensed, the company leases office space in GIFT City and establishes:
– Foreign currency bank accounts (with an IBU or authorized bank)
– Books of accounts in foreign currency
– Systems for IFSCA reporting and regulatory compliance
– Anti-money laundering and know-your-customer procedures
Step 4: Operational Launch
Begin financial services operations. Transactions are conducted entirely in foreign currencies, and regulatory reports are submitted to IFSCA in USD.
The entire process typically takes 2-4 months from application to operational status, significantly faster than establishing offshore operations in Singapore or Dubai.
Why Companies Choose GIFT City Over Singapore, Dubai, and Cayman Islands
Cost Advantage
GIFT City offers office space, utilities, and operational costs at one-third to one-half of Singapore or Dubai. Property prices are significantly lower, and talent costs are lower.
Additionally, the Section 80LA tax holiday (10 years of zero tax) is more aggressive than Singapore’s 5% corporate tax or Dubai’s 0% at sector level (which requires specific approvals).
Proximity to India market
Unlike true offshore jurisdictions, GIFT City units can serve the Indian market directly. An IBU can provide trade finance to Indian importers without going through traditional channels. A fund can invest in Indian startups and still benefit from offshore tax treatment.
This hybrid model is unique: offshore for global clients, but accessible to onshore India.
Regulatory Stability
IFSCA operates under the authority of India’s Ministry of Finance and is backed by the Indian government’s commitment to GIFT City. Unlike some financial centres which rely on political whim, GIFT City has long-term backing via legislation (IFSCA Act 2019).
The 2025 Budget extension of tax benefits to 2030 demonstrates continued commitment.
Improving Infrastructure
GIFT City’s Master Plan includes three metro connections (Violet Line, Green Line, Blue Line). The Violet Line is already operational to GIFT City, which will reduce travel times from Ahmedabad airport from 45 minutes to 15 minutes. For more details, see our GIFT City metro guide. Office buildings are modern and LEED-certified. Fiber optic connectivity is world-class.
Current operational capacity is already at 60% occupancy across office buildings, with major expansions underway.
Current Status and Growth
As of November 2025:
– 1,034 entities registered (up from 150 in 2020)
– 35+ banks with operational IBUs
– Over 100 billion USD in total banking assets
– 20,000+ employees generated
– Ranked 43rd globally in the Global Financial Centres Index (GFCI), up 9 positions in one year
The number of entities more than quadrupled in the last 5 years, indicating accelerating adoption among international financial services companies.
The Economic Survey 2025 highlighted GIFT City as India’s fastest-growing financial centre.
If you’re planning to relocate to or work in GIFT City, see our guide on how to reach GIFT City from Ahmedabad for transport options.
Frequently Asked Questions
1. Can an Indian resident open an account at an IFSC Banking Unit?
Yes, but with restrictions. An Indian resident can open a Foreign Currency Account (FCA) at an IBU for legitimate business purposes (trade, travel, investments). However, funds transferred to an FCA must be repatriated to India within 180 days unless reinvested. This falls under the Liberalized Remittance Scheme (LRS). Non-residents can freely maintain and use FCA accounts.
2. What’s the difference between an IFSC Banking Unit and a regular bank branch?
An IBU is equivalent to an overseas branch. It can accept deposits from non-residents, lend in foreign currency without RBI approval, and operate 24/5 according to global market hours. A regular branch is subject to standard RBI regulations, operates in INR, and follows Indian banking rules.
3. Can an Indian company set up in GIFT City IFSC?
Yes, but it must be a separate entity. An Indian company can establish a subsidiary (special purpose entity) in GIFT City IFSC. However, the subsidiary must conduct all business in foreign currency and serve international clients. It cannot primarily serve the domestic Indian market.
4. Is GIFT City’s IFSC regulated by the RBI?
No. The RBI’s regulatory powers regarding IFSC units have been transferred to IFSCA. IFSCA is the unified regulator. The RBI still plays a role in areas like currency management and the stability of the broader financial system, but day-to-day regulation of IFSC units is IFSCA’s responsibility.
5. What are Global Capability Centres (GCCs) and why are they setting up in GIFT City?
GCCs are service centres established by global companies (typically in IT, finance, consulting) to provide backend services to their worldwide operations. GIFT City offers them lower costs than their home countries, access to Indian talent, and offshore tax benefits. Over 50 GCCs have registered in GIFT City since 2023.
6. Can I trade US stocks via GIFT City?
Yes. NSE IFSC offers unsponsored depository receipts (UDRs) mirroring 50 US stocks listed on the S&P 500. You can open an account with an NSE IFSC broker and trade these receipts in USD without converting to INR. This eliminates currency conversion fees and forex risk.
7. What happens if the Indian government removes GIFT City’s IFSC status or tax benefits?
This would be unprecedented, as it would violate the IFSCA Act (which requires parliamentary approval to repeal). Additionally, removing benefits would damage India’s credibility as a financial centre, making future FDI harder. The government’s continued expansion of tax benefits (extended to 2030 in the 2025 Budget) suggests the opposite trajectory.
Conclusion: GIFT City as India’s answer to global financial centres
GIFT City IFSC represents a fundamental shift in how India participates in global finance. Rather than sending financial services companies to Singapore, Dubai, or London, India created an “offshore within India” with offshore rules but onshore accessibility.
The 1,000+ entities currently operating in GIFT City range from megabanks (Axis, HDFC, SBI) to startups launching blockchain platforms. They collectively manage over USD 100 billion in assets and employ over 20,000 people.
The IFSC’s success depends on three factors: regulatory clarity (IFSCA provides this), tax competitiveness (Section 80LA provides this), and infrastructure (currently being built via metro, office buildings, and digital connectivity).
As Ahmedabad grows as a business hub anchored by GIFT City, the city’s role in global finance will only deepen. For companies, investors, and professionals in Ahmedabad, understanding how GIFT City’s IFSC operates as a separate jurisdiction is increasingly important.
The next major milestone is achieving GFCI top-30 ranking (currently 43rd globally). If GIFT City achieves that, it will reshape how India participates in global financial services.
For detailed information, visit the official IFSCA website and GIFT City’s official site.
Last updated: March 2026. Information in this article is based on IFSCA regulations, Government of India Economic Survey 2025, and operational data from November 2025. Tax benefits and regulations are subject to change.
