Understanding GIFT City

For years, a large part of India’s international financial activity has taken place outside the country. Global investors accessing Indian markets, Indian companies borrowing in foreign currency, and funds managing India-focused money have often operated through overseas financial centres.

GIFT City was created to change that. Short for Gujarat International Finance Tec-City, GIFT City is India’s first International Financial Services Centre (IFSC). It is a dedicated financial zone designed to handle international financial activities from within India, under a framework that is distinct from the country’s domestic financial system.

It allows banks, asset managers, insurers and other market participants to offer cross-border financial services such as foreign currency lending, fund management and capital market products. These activities are governed by rules that are aligned more closely with global financial practices. GIFT City is located between Ahmedabad and Gandhinagar in Gujarat and is intended to serve as a link between Indian financial markets and global capital.

When was GIFT City created?

The idea of GIFT City was first announced in 2007 by the Government of Gujarat. However, the project gathered real momentum only after the central government approved the setting up of an IFSC within GIFT City in 2015.

An important milestone followed in 2020, when the International Financial Services Centres Authority (IFSCA) was established as the single regulator for the IFSC. This brought banking, capital markets, insurance and fund management activities under one regulatory umbrella, replacing the earlier multi-regulator approach.

Why was GIFT City needed?

Before GIFT City, much of India-related international finance was conducted outside the country. Indian companies raised foreign currency loans abroad, global funds invested in India through offshore structures, and financial products linked to Indian markets were often traded overseas.

This increased costs, added regulatory complexity and meant that a large share of financial activity linked to India was handled by overseas hubs such as Singapore and Dubai. GIFT City was created to bring these international financial activities back onshore, while still allowing them to operate under rules suitable for cross-border finance.

How is GIFT City different from India’s domestic market?

The IFSC at GIFT City operates under a distinct framework:

• Most transactions are conducted in foreign currency, primarily US dollars
• Regulations are aligned with international financial standards
• Operational and tax rules are structured to support cross-border activity
• A single regulator oversees the entire ecosystem

In effect, GIFT City can be seen as an international financial zone within India, designed specifically for global and cross-border financial services.

Why does GIFT City matter today?

As India’s financial markets deepen and capital flows become increasingly global, GIFT City is playing a growing role in areas such as global fund management, foreign currency borrowing and cross-border investment structures.

At the same time, GIFT City remains an evolving ecosystem. Its relevance today is greatest for institutional investors, asset managers and financial firms, while the scope and structure of participation for individual investors is still developing. As a result, there is considerable confusion around how GIFT City works in practice—what products are available, who they are meant for, how they are regulated and what risks investors should be aware of.

For investors trying to understand India’s growing links with global financial markets, clarity on these aspects is essential. Value Research is coming up with a Roundtable on GIFT City with experts from all across. Is it good, bad, what are the opportunities, all the questions answered by them.

The Roundtable will go live on December 22, 2025 (Monday), 6.30 PM. You can check it out live on the Value Research YouTube channel.

This article was originally published on December 20, 2025.