GIFT City: India's Gateway to Global Finance and Investment

Abstract: This article examines the Gujarat International Finance Tec-City (GIFT City), India's first and only International Financial Services Centre (IFSC), and explains why it has moved from a policy experiment to a strategic consideration for global financial institutions. Drawing on regulatory documents, budget announcements and market data up to mid-2026, it describes how the IFSC's non-resident, foreign-currency regime works around the rupee's capital-account restrictions, how a unified regulator (IFSCA) operates, and how its twenty-year tax holiday compares with those offered by Singapore and Dubai, and what the growth in banking assets, GIFT Nifty turnover, fund commitments and aircraft leasing reveal the extent of actual adoption. The article also weighs the remaining risks around liquidity, talent and internationalization before concluding that GIFT City's realistic ambition is to become the default jurisdiction for the India-linked share of global finance.

Keywords: GIFT City; IFSC; IFSCA; offshore finance; aircraft leasing; GIFT Nifty; tax incentives; India

1. Introduction
For decades, India was a customer of global finance rather than a host of it. When an Indian steelmaker borrowed in euros, the deal closed in London; when Air India leased an aircraft, the contract was signed in Dublin; and derivatives on India's own benchmark index traded on the Singapore Exchange. The fees, taxes and high-value jobs from that activity stayed abroad. The policy instrument created to reverse this is the Gujarat International Finance Tec-City (GIFT City), an 886-acre financial district on the Sabarmati River launched in 2015 as India's first and only International Financial Services Centre (IFSC). It now accounts for over 1,100 registrations and authorisations granted by its regulator, banking assets above US$106 billion, and the primary offshore trading venue for India's flagship equity index (GIFT City, 2026; IFSCA, 2026a). In the Union Budget 2026-27, the government doubled its tax holiday from ten to twenty years, a rare signal that the commitment is meant to last for decades rather than a single electoral cycle (Business Standard, 2026a). This article sets out how the model works, what the evidence of adoption shows, and where the risks lie.

2. The Currency Problem and Its Solution
India-linked finance left India because the rupee is not freely convertible on the capital account. That is a deliberate safeguard rooted in the lessons of the 1997 Asian crisis, but it pushed global capital to route its India business in dollars through Singapore, London, Dubai and Mauritius. GIFT City addresses this through a practical regulatory mechanism. Units inside the IFSC are treated as non-resident under the Foreign Exchange Management Act and transact in US dollars, euros and pounds rather than rupees (PwC, 2024). Much like an airport duty-free zone, it sits physically on Indian soil but operates, for exchange-control purposes, as an offshore financial centre, all under Indian law and an Indian regulator.

3. One Regulator, Competitive Taxes, and Why It Is Not a Haven
Whereas a mainland financial firm must deal with four regulators (RBI, SEBI, IRDAI and PFRDA), the IFSC consolidates all four sets of powers in a single statutory body, the International Financial Services Centres Authority (IFSCA), created by an Act of Parliament in 2019 and operational since October 2020 (PwC, 2024; IFSCA, 2026a). This single window speeds up approvals and has produced internationally benchmarked rulebooks for banking, funds, insurance and aircraft leasing. On tax, India decided to compete directly with its global peers. IFSC units get a 100 percent income-tax deduction for twenty consecutive years within twenty-five (extended from ten in Budget 2026-27), followed by taxation under the applicable corporate tax regime, together with exemptions from GST on specified IFSC transactions, securities transaction tax and stamp duty (Business Standard, 2026a; India Briefing, 2026). Despite these incentives, GIFT City does not meet the conventional characteristics of a tax haven because it operates under a statutory regulator with robust AML and KYC requirements, alongside supervisory cooperation agreements including recent memoranda with the regulators of South Korea and Japan (IFSCA, 2026a). Much of this financial activity had historically been conducted through overseas financial centres, limiting India's ability to capture the associated tax revenues, financial services activity, and high-value employment.

4. The Evidence of Scale
Banking assets crossed US$106.7 billion in February 2026, a sevenfold rise from US$14 billion in September 2020. There are now 37 banks operating in the centre, 20 of them foreign, including JP Morgan, Citi, HSBC, Deutsche Bank, MUFG and Standard Chartered (GIFT City, 2026). Banks in the centre have cumulatively disbursed over US$100 billion in foreign-currency loans, and nearly one in every three dollars of India's external commercial borrowing is now initiated through the IFSC, with cumulative ECB bookings routed through GIFT City of about US$55.7 billion as of December 2025 (Business Standard, 2026a; Tata Capital, 2026). In capital markets, Nifty futures liquidity migrated from Singapore in July 2023; GIFT Nifty has since recorded cumulative turnover of US$3.21 trillion, a record single-day turnover of US$23.48 billion in February 2026 and record open interest of US$21.56 billion in June 2026, trading roughly 21 hours a day in dollars with access for US institutions under CFTC and SEC relief (ANI, 2026; UNI, 2026). Fund management is the fastest-growing segment: 217 registered fund managers running 360 schemes with US$39.09 billion in commitments as of March 2026, up nearly 148 percent year on year (IFSCA, 2026a; Cafemutual, 2026). Premiums transacted through IFSC insurance offices and intermediaries reached US$334 million in the final quarter of FY2025-26, roughly eleven times the 2020 level, and IFSCA had granted 1,147 final registrations and authorisations in total, with about 30,000 professionals working in the zone (IFSCA, 2026a).

5. Who Is Coming, and Why
Banks find an unusually low entry barrier, since they can operate through a branch rather than a subsidiary with US$20 million in minimum capital, and the extended holiday changes the return arithmetic on foreign-currency lending to Indian borrowers (PwC, 2024; India Briefing, 2026). Fund managers and family offices get a tax-neutral, dollar-denominated, well-regulated route into Indian assets that increasingly replaces Mauritius and Singapore structures; the Family Investment Fund framework (US$10 million minimum corpus) has attracted applications from the family offices of Narayana Murthy and Azim Premji, and IFSCA registered its first foreign family office in April 2026 (Business Standard, 2026b). Aircraft leasing is the clearest onshoring win. About 85 percent of India's airline fleet is leased, historically through Dublin or Singapore, and GIFT City now hosts 38 lessors with more than 370 aviation assets worth about US$5.8 billion (IFSCA, 2026b; Khabarpatri, 2026). IndiGo's leasing arm plans to expand its GIFT-leased portfolio from around 75 to nearly 150 aircraft by March 2027, and Air India's from over 50 to 76 aircraft over the same period (Press Information Bureau, 2026). The Cape Town-aligned Protection of Interests in Aircraft Objects Act, 2025 resolved long-standing repossession concerns, against a decade-long Indian aircraft financing requirement estimated at US$170 to 200 billion, though leases into Indian airlines still attract 5 percent integrated GST, a friction absent in some rival jurisdictions (Press Information Bureau, 2026; Khabarpatri, 2026; Aviation Jeta, 2026). Multinational treasury centres, insurers and fintech operations, including a Google global fintech operations centre, round out the ecosystem (Forbes India, 2023).

6. The Honest Comparison, and the Risks
An honest comparison shows GIFT City remains a relatively young financial centre compared with the established global hubs. Dubai's DIFC ended 2025 with 8,844 active companies and a workforce of 50,200, roughly eight times GIFT's corporate base, and Singapore retains unmatched depth in talent and liquidity (DIFC, 2026). Outside the flagship Nifty contract, secondary-market liquidity is still thin, senior talent must be brought in to Gandhinagar, and the real test of internationalisation is whether third-country business becomes routine rather than exceptional. Yet GIFT City holds one advantage no rival can replicate: direct, purpose-built access to one of the world's fastest growing major economies. The Global Financial Centres Index of March 2025 ranked it 46th worldwide and first globally on reputational advantage (Business Standard, 2025). Policy consistency, the classic killer of incentive zones, also looks unusually secure here, with continuous political sponsorship since the project's origins and a twenty year tax framework that spans electoral cycles (Business Standard, 2026a).

7. Conclusion
GIFT City will not displace Singapore or Dubai for global, non-India business, and its architects do not claim it will. Its realistic ambition is narrower and more consequential: to become the default jurisdiction for the India-linked share of global finance, a share that is expanding as fast as any in the world. The infrastructure is built, the rulebook is written, and the incentives now run for a generation. The remaining question is the pace at which adoption will continue, and how quickly global institutions choose to establish a presence within the ecosystem.

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