GIFT City IFSC: Features, Benefits and Complete Guide

Introduction

The International Financial Service Centre (IFSC)  is a financial hub catering to international clients located outside a country’s border. IFSC regulations support the movement of finance, financial products and services across international borders. 

The regulatory environment of IFSC supports entities like banks, fund managers, insurers, etc., in setting up operations to service international clients. With time, the IFSCs become hubs for high-net-worth individuals to manage their money. Places like London, New York, Singapore, Dubai and Hong Kong have become synonymous with international finance.

What is GIFT City IFSC?

The Gujarat International Finance Tec-City, known as GIFT City, is India’s first and most developed greenfield smart city project. As a greenfield smart city, it combines eco-friendly elements and modern infrastructure.  

GIFT City is India’s financial services Special Economic Zone (SEZ) with an International Financial Service Centre (IFSC) and local financial centre. The IFSC aspires to be a global financial services centre like Dubai and Singapore.

The IFSC in GIFT City is treated as an off-shore entity, i.e., for financial purposes and transactions, it is treated as a part outside India. GIFT City IFSC is designed to cater to cross-border money flows in financial instruments and services. GIFT City is, therefore, a multi-service SEZ with an IFSC status and the first of its kind in India.

Key Features and Benefits of IFSC in GIFT City

GIFT City is a multi-service SEZ designed to attract global investment. It has several benefits/features that allow ease of setting up businesses and assets. 

Some of the features of GIFT City IFSC are include:

• Modern state-of-the-art infrastructure with a focus on sustainability.

• Fiscal Incentives include a progressive tax regime, exemptions, and concessions.

• Regulatory structure that allows for easy repatriation. 

• Single regulator IFSCA (International Financial Service Centre) regulates and streamlines all the activities.

• Lower operating costs are due to tax incentives and subsidies offered by the Gujarat government.  

• Easy access to talent from the surrounding hubs of Ahmedabad and Mumbai. 

• Strategic location between the business capital Ahmedabad and political capital Gandhinagar in Gujarat.

IFSC Banking Units (IBUs) in GIFT City

An IFSC Banking unit, otherwise known as an IBU, is a banking unit set up to operate like an overseas financial institution branch. The IBU acts as an extension branch of a financial institution, specifically catering to international banking needs.

IBUs within GIFT City can handle deposits of foreign currency accounts in the form of current, saving, and term deposits and lending products such as loans, trade finances, credit enhancers, post-shipment export credits, etc.

Owing to a favourable business environment, there are multiple banks, both national and international, that offer banking services services.

List of banks under GIFT City IFSC

GIFT City's favourable regulatory environment has attracted Indian and international banks to set up operations. 

Here are some of the prominent banks that have GIFT City branches: 

Industries and Services in IFSC GIFT City

Envisioned to be a global hub for financial services, GIFT City hosts industries and services centred around finance and technology. Industries and services range from book-keeping, accounting, taxation and financial crime compliance (BATF) services to global in-house centres to assist front and back office operations.

Despite this focus on financial services, GIFT City also allows and has other industries such as aircraft and ship leasing, foreign education, and other ancillary services.

Also Read:

• ​WTC GIFT City
• ​Benefits of GIFT City
• ​GIFT City Future Plans:
• ​GIFT City Location​

Infrastructure and Utilities at IFSC GIFT City

Gift City is a greenfield smart city with state-of-the-art eco-friendly infrastructure and public utility services.

GIFT City’s Command and Control Center (inset picture) is responsible for proactively monitoring and managing utility infrastructure. It engages in real-time incident tracking for rapid response and involves 24/7 CCTV surveillance supported by data analytics.

Gift City IFSC’s significant milestone is a fully automated waste management system that involves automated waste collection via chutes, bins and a pipeline network. It has infrastructure innovations like an underground utility tunnel to maintain power, water and sewage systems. The distinct cooling system eliminates the need for outdoor cooling.

Challenges and Risks of IFSC GIFT City

To understand future challenges and risks with GIFT City IFSC, we must draw parallels to established financial centres like DIFC (Dubai International Financial Center), Singapore, and AGDM (Abu Dhabi Global Market).

The biggest challenge facing GIFT City IFSC is the uncertainty in its tax regulatory environment over the long term. The tax benefits for GIFT City have been extended till 2030. It remains to be what will happen post-2030: whether the benefits will continue to exist or lapse. Currently, there are some grey areas in the taxation of GIFT City funds.

However, the regulator, the International Financial Services Centres Authority (IFSCA), has proactively addressed areas. It has streamlined all the inconsistencies in regulations to support the operations of international entities there.

Why choose GIFT City IFSC? 

GIFT City offers attractive benefits like tax holidays on income tax till 31st March 2030. There is zero Securities Transaction Tax, Commodities Transaction Tax (CTT), and stamp

Duty on transactions in GIFT City exchanges. Companies established in GIFT IFSC are subject to Minimum Alternative Tax (MAT) at 9% of book profits. 

GIFT City offers an attractive proposition for NRIs and international investors to be a part of India’s growth story. All GIFT City products are denominated in USD, do not require the opening of bank accounts, offer easy repatriation, and give tax-free returns. 

GIFT City has something to offer whether you are a financial service entity or an NRI/international investor.

To learn more about GIFT City Investments, read this blog - How to invest in GIFT City IFSC

Conclusion

GIFT City IFSC provides a unique opportunity for NRIs and global investors to participate in India’s growth story. With top-grade infrastructure, public amenities, and an evolving regulatory landscape, this city is quickly proving to be an attractive destination for individuals and businesses to set up their investments. 

GIFT City IFSC is already home to many prominent financial institutions worldwide. The growing list of industries and services available showcases its versatility and growth focus. 

It’s only a matter of time before GIFT City becomes a prominent financial hub like Dubai and Singapore.

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