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In the latest edition of the Global Financial Centres Index (“GFCI”), Gujarat International Finance Tec-City (“GIFT City”) International Financial Services Centre (“IFSC”) has climbed to the 46^th position from its previous ranking of 52^nd. The GFCI, compiled by the Z/Yen Group, assesses financial centres worldwide using 140 (one hundred forty) key indicators sourced from third-party organisations such as the World Bank, the Organisation for Economic Co-operation and Development, and the United Nations. These indicators evaluate centres based on criteria including the business environment, infrastructure, human capital, financial sector development, and overall competitiveness.

The Government of India, through a series of measures, including key announcements in the Union Budget 2025–26, aims to strengthen the International Financial Services Centres Authority (“IFSCA/ Authority”) and position GIFT IFSC as a leading global financial hub. Among the most notable reforms is the extension of sunset date for tax exemptions of newly incorporated IFSC units from March 31, 2025, to March 31, 2030. These exemptions apply to income generated from aircraft and ship leasing, offshore derivative instruments, and insurance policies issued by IFSC units. Additionally, the Budget extended tax-neutral relocation provisions for retail mutual funds and exchange-traded funds, further enhancing GIFT City’s attractiveness for global fund managers.

This edition of March-April 2025 newsletter captures the key regulatory developments aim to reinforce GIFT IFSC’s role as a dynamic and competitive international financial centre. Notably, these developments underscore IFSCA’s commitment to enhancing GIFT IFSC’s position as a global financial hub through regulatory reforms, sector-specific initiatives, and strategic engagements.

Key clarifications on net worth and settlement guarantee fund contributions[1]

Pursuant to the amendment to the IFSCA (Market Infrastructure Institutions) Regulations, 2021 (“MII Regulations”) on November 1, 2024, the definition of ‘net worth’ for a Clearing Corporation was revised to mean the aggregate value of its liquid assets, as specified by the Authority. It was further stated that these liquid assets would include cash and bank balances, fixed deposits, government securities, and other instruments specified by the Authority. Further, Regulation 31 of the MII Regulations permitted funding of the Settlement Guarantee Fund (“SGF”) of a Clearing Corporation through contributions from the Clearing Corporation, the Stock Exchange, and Clearing Members.

It has been clarified by the IFSCA that the Clearing Corporation’s contribution to its SGF will be counted towards its net worth. Furthermore, the interest earned in cash contributions to the SGF will also accrue to the SGF and be distributed pro-rata among contributors based on their share.

Entity incorporation in GIFT IFSC[2]

Entities intending to establish business operations in GIFT IFSC through a new company or limited liability partnership are advised to seek assistance from the IFSCA in case they face any problems while processing e-forms for name reservation or incorporation through the Central Registration Centre (Ministry of Corporate Affairs).

To enable IFSCA to take up the matter with the Ministry of Corporate Affairs, request to IFSCA must be accompanied with a copy of challan (service request number), duly certified application form (name reservation/incorporation) and all the documents submitted with reference to the queries raised, regarding re-submission of the e-forms as per the Company Act 2013.

Guidelines on cyber security and cyber resilience for regulated entities[3]

Cyber security is a foundational pillar for ensuring the stability, resilience, and credibility of the financial services offered within the GIFT IFSC. The guidelines on cyber security and cyber resilience intend to lay down IFSCA’s broad expectations from its Regulated Entities (“REs”) including any entity licensed, recognised, registered, or authorised by IFSCA. Implementation of these guidelines follow the principle of proportionality, considering the entity’s scale and complexity, nature of the activity, operations, and exposure to cyber risks. Some of the key components of the guidelines are stated below:

• Governance: REs are required to establish governance mechanisms to manage cyber risks effectively. Oversight may be handled by the governing board, senior management, or a designated committee. The board and senior leadership must have sufficient expertise to manage cyber risks and foster a strong security culture of cyber risk management. Each RE are required to appoint a Chief Information Security Officer (“CISO”) or a senior officer to assess and mitigate risks, respond to incidents, establish controls and implement cybersecurity processes. This individual will be referred to as the “Designated Officer.”
• Cybersecurity and cyber resilience framework: REs must develop a cybersecurity framework to ensure confidentiality, integrity, and availability of Information Technology (“IT”) assets. The REs will formulate an Information Security (IS) Policy which will cover asset identification and classification, protection mechanisms, access control, physical security, vulnerability assessment, incident management, recovery procedures, and audit trails. This framework should:
  • define cyber risk appetite and resilience objectives;
  • identify and mitigate third-party cyber risks;
  • establish clear roles and communication protocols for incident response; and
  • be periodically reviewed and updated.
• Third party risk management: REs must work collaboratively with third-party vendors to ensure cybersecurity standards are met. These service providers are required to undergo security audits at least every 6 (six) months, with other vendors reviewed periodically. Clear communication and escalation procedures must be in place to manage risks, with ultimate responsibility resting on the RE.
• Communication and awareness: REs must provide training to its employees on topics in relation to issues but not limited to cyber security, social engineering, password hygiene and incident reporting procedures. REs must have a clear and accessible channels for employees to report suspicious activity, vulnerabilities and potential cyber incidents.
• Audit: REs must conduct annual cybersecurity audits through an independent auditor having certified certifications or CERT-In empanelled auditor or auditor having prior experience in cybersecurity. Audit reports must be submitted to IFSCA within 90 (ninety) days of the financial year-end. Higher-risk entities may conduct audits more frequently.

REs registered as broker dealers, clearing members, or depository participants can submit the same audit report filed with market infrastructure institutions or bullion exchanges to IFSCA within 7 (seven) days of submission.

Compliance reminder on licensing and special economic zones approvals[4]

IFSCA has issued a directive after observing that some entities are operating within GIFT IFSC without the necessary regulatory approvals. Specifically, certain businesses lack valid authorisation from IFSCA and the required Letter of Approval (“LoA”) under the Special Economic Zones Act, 2005, (“SEZ Act, 2005”), both of which are mandatory under applicable laws. To maintain regulatory discipline and support the structured growth of the financial services ecosystem in IFSC, all entities are reminded to ensure they always possess valid approvals from both IFSCA and the SEZ authorities. The REs are directed to ensure that they hold valid and subsisting:

• Certificate of Registration (“CoR”) /license /recognition /authorisation letter/ permission/ approval or any equivalent document; and
• The LoA under the SEZ Act, 2005. The expiry of the LoA (having validity of 1 (one) year, if business not commenced or 5 (five) years, after commencement of business) or failure to renew it in timely manner, may lead to appropriate enforcement action, including cancellation of the registration/ license / recognition /authorisation/permission/approval granted under the applicable IFSCA regulations or framework.

Revision in reporting formats for fund management entities in IFSC[5]

IFSCA has revised the reporting norms for Fund Management Entities (“FMEs”), the updated formats aim to capture key details of retail schemes, enhance data granularity for supervisory purposes, and improve clarity for FMEs through table restructuring and the inclusion of guidance notes. These changes also align the reporting requirements with the recently notified IFSCA (Fund Management) Regulations, 2025.

Framework for finance company/finance unit undertaking the activity of global/ regional corporate treasury centres[6]

The IFSCA (Finance Company) Regulations, 2021 (“FC Regulations”), enable a Finance Company (“FC”) /Finance Unit (FU”) to establish a set up in an IFSC and undertake permissible activities, including Global/Regional Corporate Treasury Centre (“GRCTC”). To promotes ease of doing business and bring alignment with international best practices, the IFSCA has issued a framework for FC/FU undertaking the activity of the GRCTC (“Framework”) superseding the framework for undertaking the GRCTC activities by FC/FU in IFSC dated June 25, 2021.

Some of the key provisions of the Framework are:

• Applicability: the Framework is applicable to any entity/ unit registered or desirous of seeking registration as a FC/FU under the FC Regulations, for undertaking the activity of the GRCTC.
• Conditions for Registration: the Framework sets out the conditions for grant of registration for undertaking the activity of GRCTC. An entity desirous to commence the activity of the GRCTC (“Applicant”), must apply to IFSCA and fulfil prescribed conditions while submitting the application, for obtaining a registration as a FC/FU under the FC Regulations. These conditions include:
  • possessing or undertaking necessary infrastructure including adequate office space, equipment and communication facilities;
  • satisfying substance requirement by employing at least 5 (five) qualified personnel including head of treasury and compliance officer;
  • having an ability to meet the owned fund requirements;
  • parent must not be from a ‘High Risk Jurisdiction – subject to call for action’ by Financial Action Task Force (FATF);
  • satisfaction of fit and proper requirements by the applicant, its key managerial personnel and other persons having control over it; and
  • the application must not have been refused by the Authority during the preceding 1 (one) year from the date of submission.
• Legal Form: the applicant is required to be set-up in IFSC either in the form of a company or a branch of a company incorporated in India or outside India.
• Net-Owned Fund: a FC/FU undertaking the activity of the GRCTC is required to have and consistently maintain a minimum owned fund of USD 0.2 million (US Dollars zero point two million). The required owned fund may be maintained at the parent level, if the FU is undertaking the activity of GRCTC.
• Grant of License: on being satisfied that the Applicant has complied with the conditions required for obtaining CoR and upon receipt of specified registration fees, the IFSCA may grant CoR to the Applicant, which will be valid unless suspended, withdrawn or cancelled by IFSCA or surrendered by the FC/FU. The Applicant will be permitted to conduct business in IFSC only after the receipt of the CoR under the FC Regulations and must ensure that it continues to hold a valid and subsisting LoA under the SEZ Act, 2005 during the time it is conducting business in IFSC.
• Permissible Activities: A FC/FU which has been granted CoR to undertake the activities of GRCTC, may undertake the activities such as:
  • raising capital by issuance of equity shares,
  • borrowing including in the form of inter-company deposits,
  • credit arrangements,
  • transacting or investing in financial instruments issued in IFSC or outside IFSC,
  • undertaking derivative transactions (over the counter (OTC) and exchange traded),
  • foreign exchange transactions in such currencies as specified by the IFSCA,
  • factoring and forfaiting,
  • acting as a re-invoicing centre,
  • liquidity management, and
  • maintaining relationships with financial counterparties.
• Corporate Governance: the FC is required to have a corporate governance policy, risk management policy and policy for undertaking permissible activities, approved by its board. Furthermore, prior approval of the IFSCA is required for undertaking merger, acquisition, takeover or change in management of the FC, which results in change in control of at least 20% (twenty percent) of total share capital or which impacts the authority to take business decisions under an agreement. However, no such approval is required in the case where the GRCTC is set up in a branch form.

Amendment to the guidelines on corporate governance and disclosure requirements for a FC[7]

In order to align the Guidelines on Corporate Governance and Disclosure Requirements for a FC (“Guidelines”) with FC Regulations, the IFSCA has amended the Guidelines. Below are the amendments to the Guidelines:

• Part I of the Guidelines were earlier applicable to all FCs. However, pursuant to the amendment, Part I of the Guidelines are not applicable to FCs which are registered for undertaking an activity of GRCTC; and
• Part II of the Guidelines were earlier applicable to all FCs undertaking one or more core activities with or without non-core activities, and all FCs undertaking specialised activities with or without core or non-core activities. However, pursuant to the amendment, Part II of the Guidelines are not applicable to FCs which are undertaking specialised activities with or without core or non-core activities, and GRCTC (in form of FCs) which are undertaking one more or core activities with or without non-core activities.

Amendments to the framework for ship leasing[8]

IFSCA has amended the Framework for Ship Leasing[9] (“SL Framework”), and circular issued under SL Framework (“Circular”)[10]. The amendments modify the provisions dealing with currency for conduct of business and additional requirements for carrying out the permissible activities by FC as a lessor.

The amendments to the SL Framework are detailed out as under:

• The lessor entities are required to raise invoices in any foreign currency listed in the first schedule of the IFSCA (Banking) Regulations, 2020 and receive payments into their foreign currency accounts with IFSC Banking Units. Additionally, lessor entities are permitted to open SNRR accounts with authorised dealers in India (outside IFSC) for its business-related transactions outside IFSC (previously all transactions undertaken by a lessor was to be conducted through freely convertible foreign currency only).
• Under the amendment made to the Circular, lessor entities have been restricted to undertake a transactions involving transfer of a ship ownership or leasehold rights from Indian residents to IFSC entities, for the purpose of providing services solely to a person resident in India in a single financial year. However, this restriction does not apply to transfer of ships or ocean vessels which have been newly acquired from an Indian shipyard.

Fund management regulations 2025 notified to streamline fund management industry in GIFT-City IFSC, offering investor-friendly measures and more operational flexibility[11]

IFSCA notified the IFSCA (Fund Management) Regulations, 2025 superseding the IFSCA (Fund Management) Regulations, 2022. Key changes include reduction in minimum corpus and investment thresholds across non-retail, retail, and portfolio management service schemes to facilitate market entry and enhancement of the operation flexibility through relaxed key managerial personnel appointment norms, professional certifications, and clarity on eligibility criteria. The aim of the regulatory overhaul is to improve ease of doing business, incorporate protective measures for the investors and provide necessary clarification to the intent and scope of the existing regulatory regime.

For more details, please refer to the JSA Prism dated May 2, 2025.

Requirements for entities seeking registration as know your customer registration agencies[12]

To govern the registration, functioning, and compliance of entities operating as Know Your Customer (“KYC”) Registration Agencies (“KRAs”) within India’s IFSCs, the IFSCA has issued the IFSCA (KYC Registration Agency) Regulations, 2025. These regulations aim to strengthen compliance, promote transparency, enhance the KYC framework in GIFT IFSC and align with the global standards to provide-

• the eligibility requirement for a KRA to be registered with IFSCA;
• registration requirements including net worth for a KRA;
• qualification and experience for a KRA;
• functions and obligations of a KRA and REs in IFSC; and
• code of conduct to be followed by a KRA.

The IFSCA (Capital Market Intermediaries) Regulations, 2025[13]

The IFSCA has notified the IFSCA (Capital Market Intermediaries) Regulations, 2025, (“New CMI Regulations”), superseding the extant IFSCA (Capital Market Intermediaries) Regulations, 2021. This is a significant step in streamlining and strengthening the regulatory framework for capital market entities operating within the IFSC. The New CMI Regulations provide regulatory framework for registration, regulation and supervision of the Capital Market Intermediaries (“CMI”) operating in IFSCs in India with the objectives of protecting the interests of investors, maintaining the integrity of the securities market and promoting ease of doing business for the entities participating in the capital markets by simplifying and rationalising requirements based on feedback and suggestions received from the stakeholders. Some of the noteworthy changes under the New CMI Regulations are as under:

• Types of Intermediaries: A new category of ‘Research Entity’ has been introduced under the New CMI Regulations and the category of ‘Account Aggregator’ has been removed. ‘Research Entity’ will mean a person registered as a research entity with the IFSCA who is responsible for publishing or providing research report with respect to securities. Further, framework for ‘Distributors’ and ‘Environmental, Social, and Governance Ratings and Data Products Providers (“ERDPP”)’ has also been included within the New CMI Regulations.
• Qualifications Requirements: The New CMI Regulations prescribe for certain minimum qualifications and experience for appointment of a person as the ‘Principal Officer’ or ‘Compliance Officer’ of a CMI. For entities having multiple registrations as CMI, separate principal officers are required to be appointed for each registration (except for entity registered as broker dealer, clearing member and depository participant, or credit rating agency and ERDPP, respectively, where the same person can be the principal officer). However, compliance officer for such entities (having multiple registrations) is permitted to the same person for all registrations.
• Net Worth Requirements: The minimum net worth requirements have been rationalised for the following categories: credit rating agency – USD 200,000 (US Dollar two hundred thousand), investment adviser – USD 25,000 (US Dollars twenty-five thousand), investment banker – USD 100,000 (US Dollars one hundred thousand) and research entity – USD 25,000 (US Dollars twenty-five thousand). In case of entities operating as a branch, the minimum net worth requirements maintained at the parent level in the home jurisdiction will be earmarked for its branch in IFSC. Lastly, for broker dealers, clearing members and investment bankers, net worth maintained in the form of liquid assets will only be considered.
• Annual Compliance Audit: All CMIs are required to file a copy of annual compliance with the IFSCA latest by September 30 every year.

Expansion in the scope of trusteeship services under the IFSCA (Ancillary Service) Framework, 2021[14]

The IFSCA has expanded the scope of activities of ‘Trusteeship Services’ under the IFSCA (Ancillary Services) Framework, 2021.

Pursuant to the above amendment, ‘Trusteeship Services’ will include services to investment funds, investment trusts such as infrastructure investment trusts and real estate investment trusts, family investment funds, security trust arrangements and escrow agency functions. Furthermore, ‘Trusteeship Services’ can also be offered to various schemes, including retail schemes launched by FMEs registered under the new IFSCA (Fund Management) Regulations, 2025. All such services must adhere to relevant regulatory standards, including compliance with the ‘fit and proper’ criteria and a specified code of conduct.

Obligations of vault managers within the IFSC concerning customer due diligence and the maintenance of supply chain integrity[15]

Clarifications are made on conducting Customer Due Diligence (“CDD”) by the REs under the IFSCA (Anti Money Laundering, Counter Terrorist-Financing and KYC) Guidelines, 2022 (“KYC Guidelines”), dated October 31, 2022; and maintenance of supply chain integrity as referenced in the IFSCA circular on Operating Guidelines on Bullion Exchange, Bullion Clearing Corporation, Bullion Depository and Vault Manager (“Bullion Guidelines”) dated August 25, 2021.

• Clarifications on conducting CDD by the vault manager under the KYC Guidelines, are as follows:
  • the vault manager, being a RE under the KYC Guidelines, is required to carry out CDD, particularly for those who are ultimate beneficial owners of Bullion Depository Receipts (“BDRs”). This includes coordinating with the bullion depository to ensure availability of complete and verified customer records upon request;
  • while the vault manager may rely on CDD conducted by the bullion depository, such reliance does not exempt them from their own responsibility to independently assess and verify all customers, regardless of their location (overseas, within GIFT-IFSC, or in India). This applies to all stakeholders, including suppliers, buyers, qualified jewellers, and bullion exchange members; and
  • additionally, the vault manager must enter into agreements with overseas logistics service providers, ensuring that these providers are contractually required to perform CDD on bullion suppliers. Such CDD must align with either financial action task force standards or the regulatory framework of the supplier’s country, whichever is more stringent.
• To comply with the Bullion Guidelines on maintaining supply chain integrity, the following conditions must be met:
  • the vault manager must ensure the integrity of the supply chain in respect of bullion sourced from the jurisdiction of origin. At no stage the bullion must exit the custody of the vault manager or its authorised partner logistics service provider; and the vault manager must incorporate such requirement in their formal contractual arrangements; and
  • such contractual arrangements must ensure that the bullion once procured by the supplier from the overseas refinery, remains continuously within the custody of either the authorised partner logistics entity or any other authorised entity engaged in the collection, storage, transportation, and delivery of the said bullion. The custodial chain to remain intact throughout the delivery lifecycle until the bullion is duly received and vaulted by the vault manager.

Dispensation of net-worth requirement for ‘customers’[16]

IFSCA’s circular dated August 25, 2021, outlining the Operating Guidelines for the Bullion Exchange, Bullion Clearing Corporation, Bullion Depository, and Vault Manager, includes a definition of ‘customer’ that specifies net worth requirements of the respective customers, eligible to trade/invest on the India International Bullion Exchange (IFSC) Ltd. (“IIBX”). Thereafter, following a request from the IIBX, and to encourage broader participation in IIBX’s various products, the net worth requirement for all types of ‘customers’ has been removed. However, the net worth requirements specified by IFSCA for qualified suppliers (circular dated August 18, 2022) and qualified jewellers (circular dated December 11, 2023) will continue to apply. This will broad base participation across various products offered on IIBX. This will also remove entry barriers and make it easier to access the investment products proposed to be offered by IIBX in near future, thus, encouraging prospective participants, including retail investors, to choose IIBX for their bullion and bullion-related investments.

Change in trading hours of IIBX[17]

To foster market vibrancy, liquidity and ease of doing business, the IIBX has been granted permission to extend its trading hours for spot contracts by 3 (three) hours. The revised trading hours on IIBX for these contracts will be 9 AM to 9:30 PM (IST). The extended trading hours are expected to significantly benefit the bullion market ecosystem by enabling qualified suppliers to place sell orders and qualified jewellers/valid India-UAE CEPA Tariff Rate Quota holders to place buy orders on the same day of creation of BDRs and receipt of funds, respectively, even when such creation and receipt take place late in the evening. This will result in the optimal and timely utilisation of bullion and funds, enhancing the cost-effectiveness of trading of bullion through the IIBX.

This Prism has been prepared by:

Nand Gopal Anand Partner

Rajul Bohra Partner

Harshit Dusad Principal Associate

Anmol Khurana Associate

For a detailed analysis, please refer to the JSA Prism of April 16, 2025.

^[1] Circular dated March 7, 2025. IFSCA/CMD-DMIIT/SGF/2024-25/001.

[2] Public Notice dated March 25, 2025.

[3] Circular dated March 10, 2025. IFSCA-CSD0MSC/13/2025-DCS.

[4] Circular dated April 3, 2025. IFSCA-LPRA/9/2024.

[5] Circular dated April 3, 2025. F. No. IFSCA-IF-10SUP/1/2024-Capital Markets.

[6] Circulate dated April 4, 2025. F. No. IFSCA/24/2024-Banking-FC/01.

[7] Circular dated April 4, 2025. F. No. 172/IFSCA/Finance Company Regulations/2025-26/01.

[8] Circular dated April 7, 2025. F. No. 496/IFSCA/FC/SLF/2025-26/01.

[9] Dated August 16, 2022

[10] Dated May 8, 2024

[11] Circular dated April 8, 2025. F. No. IFSCA-IF-10PR/1/2023-Capital Markets/7.

[12] Notification dated April 16, 2025. CG-GJ-E-16042025-262470.

[13] Notification dated April 16, 2025. CG-GJ-E-17042025-262494.

[14] Circular dated April 17, 2025. F. No. 51/IFSCA/PFPS0ANCI/1/2020-21.

[15] Circular dated April 22, 2025. F. No. IFSCA-DMC0MSD/1/2024-Dept. of Metals and Commodities/01.

[16] Circular dated April 29, 2025. IFSCA-DMC/3/2023-Dept. of Metals and Commodities.

[17] Press Release dated April 29, 2025.