Setting Up a Finance Company in GIFT City
What if your company could borrow in dollars, lend across borders and pay zero income tax for 20 years, without ever leaving India?
What if you could run a global finance business at a fraction of what it costs in Singapore or Dubai, while sitting next to the world's fastest-growing major economy?
Why Are India's Biggest Names Moving Their Money Engines to Gandhinagar?
That is no longer a hypothetical. It is GIFT City, India's first International Financial Services Centre (IFSC). In the first nine months of FY26, nearly two-thirds of India's external commercial borrowings were routed through GIFT City, up from 36% a year earlier. Steel giant ArcelorMittal holds licences for two treasury centres here. IndiGo has moved 78 leased aircraft through its GIFT City arm. PFC, a government-owned NBFC, has set up its own finance company here.
The question for promoters, NBFCs, corporates and family businesses is no longer whether GIFT City matters. It is how quickly you can set up there, and how to do it right. This guide answers both.
Why This Topic Matters Now
Three developments in 2026 have turned GIFT City from an interesting option into a strategic necessity for many businesses:
- The tax holiday doubled. Union Budget 2026-27 extended the income tax holiday for IFSC units from 10 out of 15 years to 20 consecutive years out of 25, with a concessional 15% rate after it ends.
- Borrowing has shifted. About USD 18 billion of the USD 27.5 billion in ECBs raised between April and December 2025 was booked through GIFT IFSC, because interest paid to foreign lenders by IFSC units is tax-exempt and ECB rules do not apply to such raises.
- Treasury centres are taking off. Reuters reported in May 2026 that 17 corporate treasury centres were expected to go live within three months, with seven licences granted since January alone.
Add GIFT City's rise to 37th in the Global Financial Centres Index (GFCI 40, September 2026), up nine places, and the direction is clear. Early movers lock in the longest tax runway and the best positioning.
What Is a Finance Company in GIFT City?
A Finance Company is an entity registered with the International Financial Services Centres Authority (IFSCA) under the IFSCA (Finance Company) Regulations, 2021. It can lend, lease, invest and run treasury operations in freely convertible foreign currency, from Indian soil, under a regime designed to match global financial centres.
You can set it up in two forms:
- Finance Company (FC): a separately incorporated entity, such as a subsidiary, joint venture or new company under the Companies Act, 2013.
- Finance Unit (FU): a branch of an existing entity. For core activities, the parent must be a regulated financial services entity with a No-Objection Certificate from its home regulator.
Neither form can accept public deposits. Activities are split into core and non-core, and each carries a different minimum owned fund.
Why Set Up a Finance Company in GIFT City?
Beyond the headline tax holiday, the real advantage is cost of capital. Because interest paid by an IFSC unit to a non-resident lender is exempt from Indian tax, foreign lenders no longer need to be compensated for withholding tax. That single change can make dollar funding meaningfully cheaper. Add a reduced 9% minimum alternate tax for IFSC units, GST relief on services to overseas clients and stamp duty exemptions, and the economics become compelling.
The growth chart tells its own story. Banking assets have grown more than eight-fold, from USD 14 billion in September 2020 to over USD 120 billion by June 2026. Registered entities have climbed from about 725 in November 2024 to 1,260 by June 2026.
Step-by-Step: How to Set Up a Finance Company in GIFT City
- Step 1: Define your business model - Decide what you will do: lending, a treasury centre, aircraft leasing, ship leasing, trade finance or investments. This choice decides your capital, prudential norms and approvals.
- Step 2: Choose the structure - Pick a Finance Company (subsidiary or JV) or a Finance Unit (branch). Confirm promoter eligibility, and obtain a home regulator NOC where needed. Indian NBFCs, for example, need RBI's no-objection, as PFC did before setting up PFC Infra Finance IFSC.
- Step 3: Plan your capital - Budget for the minimum owned fund: USD 3 million for core activities, USD 0.2 million for treasury centres (GRCTC) and non-core activities such as operating leases. Indian parents investing in an IFSC entity must also follow overseas investment (ODI) rules under FEMA.
- Step 4: Secure office space - Take premises inside the GIFT IFSC SEZ. IFSCA expects genuine substance: a real office, key people on the ground and decisions taken locally.
- Step 5: Apply on the SWIT portal - File a single application on IFSCA's Single Window IT System (SWIT). It brings IFSCA registration and SEZ approvals into one workflow, which reduces back-and-forth across agencies.
- Step 6: Obtain provisional registration - Once your application is complete, IFSCA grants provisional registration with conditions. Use this window to incorporate, bring in capital, appoint directors and hire your principal and compliance officers.
- Step 7: Receive final registration - After you meet the conditions, IFSCA issues the final Certificate of Registration. Open your foreign currency accounts with an IFSC Banking Unit and complete PAN, GST and other tax registrations.
- Step 8: Commence operations and stay compliant - Start business and maintain ongoing compliance: capital adequacy (8% for core activities), single-party exposure limit (25%), liquidity coverage, AML and KYC, governance and periodic reporting to IFSCA.
Documents checklist
| Document | Purpose |
|---|---|
| Board resolution of the parent | Approval to set up the IFSC entity |
| Constitutional documents and group structure | Promoter and ownership verification |
| Home regulator NOC (where applicable) | Mandatory for regulated parents doing core activity |
| Business plan and 3-year financial projections | Assessment of viability and capital needs |
| Fit-and-proper declarations of directors and KMP | IFSCA eligibility norms |
| Proof of owned funds or capital commitment | Meeting the minimum owned fund |
| Office space allotment or lease (GIFT SEZ) | Evidence of physical presence |
| AML/KYC and risk management policies | Board-approved compliance framework |
Case Stories: Who Has Done It and What They Gained
Case 1: Airlines bringing aircraft finance home
For decades, Indian airlines leased aircraft through Ireland and Singapore. That is changing. By March 2026, IndiGo had leased 78 aircraft through InterGlobe Aviation Financial Services IFSC and plans to reach 150 by March 2027. Air India's AI Fleet Services plans to scale from 16 to as many as 75 aircraft. Akasa Air has set up Akasa Air Leasing IFSC to lease 60 aircraft over five years. Over 370 aviation assets had been leased from GIFT IFSC by March 2026.
The takeaway: the same value that once flowed to offshore hubs now stays in India, with tax benefits that match or beat those hubs.
Case 2: Global corporates centralising treasury
ArcelorMittal holds regulatory approvals for two treasury centres in GIFT City and plans to use them for cash pooling across its India businesses. Adani Group, Bharti Airtel and Genpact are among the companies planning treasury operations, according to Reuters (May 2026). Treasury centres in GIFT IFSC already had over USD 6.54 billion in credit outstanding by June 2026.
The takeaway: a treasury centre needs only USD 0.2 million in owned funds, yet lets a group pool cash and borrow at group level with far more flexibility.
Case 3: Government NBFCs going global
PFC Infra Finance IFSC Ltd, a wholly owned subsidiary of Power Finance Corporation, was incorporated in February 2024 after RBI's no-objection, making PFC the first government NBFC to set up a finance company in GIFT IFSC. SCI Bharat IFSC, owned by the Shipping Corporation of India, began operations as a finance company in 2024.
The takeaway: if large regulated institutions see value in an IFSC arm, mid-sized NBFCs and corporates can too, with the right structure.
Things to Consider Before You Apply
One point deserves special attention. Under Budget 2026-27, units that commence operations on or after 1 April 2026 get the tax holiday only if they are not formed by splitting up or reconstructing an existing business in India. Moving an existing Indian lending book into GIFT City without careful structuring can cost you the very benefit you came for.
The Global Perspective: How GIFT City Compares
GIFT City does not have to beat Singapore or Dubai on every count. Its unique edge is onshore access to India. A finance company in Singapore serves India from outside; a finance company in GIFT City serves the world from inside India. For any business whose growth is tied to India, that is a structural advantage no offshore hub can copy.
The Future of GIFT City
The momentum points one way. IFSCA continues to widen the toolkit: amendments in April 2026 allowed special purpose vehicles for leasing transactions, and treasury centre rules were liberalised in 2025 with discussion under way on commodity trading and wider currency transactions. The Budget 2026-27 also eased deemed dividend rules for intra-group loans by IFSC treasury and finance units, subject to conditions.
With over 20,000 jobs, 1,260 registrations and banking assets above USD 120 billion, GIFT City is moving from a promise to a platform. Expect three trends over the next five years:
- Treasury centres become standard for Indian groups with overseas operations.
- Aircraft and ship finance onshoring accelerates, as airlines double fleets.
- Mid-sized NBFCs and family offices follow the large players, using GIFT City for dollar lending, trade finance and global investment.
The Major Crux
In one line: GIFT City lets you run a global finance business from India, in foreign currency, with a 20-year tax holiday. The opportunity is real, but the benefits depend on getting the structure, substance and compliance right from day one.
Summary: Key Takeaways
- A Finance Company in GIFT IFSC can lend, lease, invest and run treasury operations in foreign currency under IFSCA.
- Minimum owned funds: USD 3 million for core activities; USD 0.2 million for treasury centres and non-core activities.
- Tax holiday: 100% for 20 consecutive years out of 25 (Budget 2026-27), then a 15% rate.
- Setup follows eight steps, from defining the business model to final registration through the SWIT portal.
- Brands including IndiGo, Air India, ArcelorMittal, Adani, Airtel and PFC are already using GIFT City.
- Substance, the no-splitting condition, FEMA rules and transfer pricing are the biggest watch-outs.
How Panchal S K & Associates Can Help
At Panchal S K & Associates (PSK), we work with NBFCs, fintechs, corporates and family businesses on regulatory, tax and compliance matters across RBI, SEBI and IFSCA frameworks. For a GIFT City finance company, we support you end to end:
| Stage | How PSK supports you |
|---|---|
| Feasibility | Business model review, activity selection and tax impact analysis |
| Structuring | FC vs FU choice, FEMA/ODI compliance, avoiding the business-splitting trap |
| Registration | SWIT application, documentation, IFSCA and SEZ coordination |
| Setup | Incorporation, capital infusion, bank accounts, PAN, GST and LUT |
| Ongoing compliance | Prudential reporting, audits, AML/KYC, transfer pricing and tax holiday claims |
Frequently Asked Questions
What is the minimum capital to set up a finance company in GIFT City?
USD 3 million in owned funds for core activities such as lending, and USD 0.2 million for treasury centres and non-core activities such as aircraft or ship operating leases.
How long does registration take?
Typically a few months, depending on the completeness of documentation and the activity. IFSCA first grants provisional registration, then final registration once conditions are met.
What is the tax holiday for IFSC units?
Following Budget 2026-27, IFSC units can claim a 100% income tax exemption for 20 consecutive years out of 25, with a 15% rate thereafter, subject to conditions.
Can an Indian NBFC set up a finance company in GIFT City?
Yes. It needs a no-objection from its regulator (RBI), and must follow overseas investment rules for the investment into the IFSC entity.
Can a GIFT City finance company accept deposits?
No. Finance Companies and Finance Units in IFSC cannot accept public deposits.
Disclaimer: This article is for general information and educating purpose and does not constitute legal, tax or investment boost / force. Regulations and tax provisions change frequently; please consider before proceeding.