ET WLF 2026: GIFT City eyes reforms to bring offshore biz home

GIFT City is shifting its focus from becoming a global financial centre to bringing more India-related cross-border financial business back to the country, with the regulator signalling a push to plug gaps in products, expertise and regulation that drive such business overseas.

"If GIFT is able to serve what you always wanted to do from India, then there is no need to create structures outside," Dipesh Shah, executive director of the International Financial Services Centres Authority (IFSCA), said during a panel discussion on the role of international financial services centres in achieving the goals of 'Viksit Bharat 2047'.

Shah said the first phase of GIFT City's development was focused on creating the regulatory framework and attracting financial institutions. The next phase, he said, is to ensure that more business is actually transacted from the centre.


He said GIFT should become a landing point for both inbound and outbound investment and urged Indian institutions to assess whether activities currently routed through Singapore, Dubai, Mauritius and other financial centres could instead be conducted through GIFT.

"GIFT can only become successful when we all start putting our trust into our own financial centre," Shah said. Some of that shift is already under way. According to Shah, around 70% of India's external commercial borrowings are now being booked through GIFT City, while the fund ecosystem has grown to about 400 funds and more than 150 fund managers, with commitments of around $40 billion.

But industry participants said the next test is not the number of entities registered in GIFT City, but the volume and complexity of business actually conducted there. "We don't have to compete against the DIFC or Singapore or those kinds of markets," said Pradip Sonawane, managing director and chief executive officer of Emirates International Insurance Brokers LLC. GIFT's strength, he said, lies in India's "growing economy, the scale and the complexities". "The real success, in my opinion, is that the business has to be transacted in GIFT City," Sonawane said.

That is particularly relevant to insurance and reinsurance, where India generates increasingly complex risks but a significant share of international business continues to be handled outside the country.

"We need to see that international business comes into GIFT City... International reinsurance business should be transacted here," Sonawane said.

For that to happen, he said, GIFT will need to build deeper expertise in areas such as risk management, data, complex products and technology. The objective, he added, should be to develop the capacity to handle sophisticated risks originating in India and eventually attract international reinsurance business to the centre.

Shah cited an aircraft buying deal by a GIFT City entity as an example of the wider ecosystem taking shape in GIFT. A transaction involved financing from a GIFT-based bank, legal advice from a firm based there and trustee services within the centre. Such services were previously often sourced from international centres such as Dublin or Singapore.

Outbound Deals

The other major opportunity is outbound investment.

Radhika Gupta, managing director and chief executive officer of Edelweiss Asset Management, said GIFT could become a bridge between growing Indian capital and global markets while also facilitating global investment into India.

"Global capital will come into India and Indian capital will go out of India, and it will happen at scale that gives it an opportunity to make it efficient and be the default choice," Gupta said.

As Indian investors become wealthier, she said, international diversification would become an increasingly important part of their portfolios.

"For most Indians, having 10-15% allocation to some parts of the world is going to be necessary, and that opportunity will be available through GIFT," Gupta said.

'Hub and spoke' model

The emerging proposition is a hub-and-spoke model, with GIFT City serving as the international financial hub and the Indian mainland and overseas markets forming the spokes.

Saurabh Sharma, chief legal officer at SPEC Finance, said funds were increasingly looking at GIFT through this lens.

"That's why you have a lot of funds that are using it as a hub-and-spoke model. So you have a hub sitting in GIFT, which will invest further down in the mainland," Sharma said.

The model allows an international-facing financial platform to be based in GIFT while capital is deployed into mainland India. It can also work in reverse, allowing Indian capital to access overseas markets through the same hub.