The Dawn of a New Regulatory Paradigm in GIFT-IFSC
The establishment of the IFSCA (TechFin and Ancillary Services) Regulations, 2025, marks a pivotal moment in the development of India’s International Financial Services Centres. Notified on July 8, 2025, the new regulations supersede and consolidate earlier, more fragmented frameworks that governed TechFin and Ancillary service providers. A critical aspect of the new regulations is the clear definition of the roles of various entities and the flow of services.
A TechFin and Ancillary Service Provider is an entity granted registration by the IFSCA to offer a wide range of services, either technology-driven (TechFin) or professional support (Ancillary). The services are provided either directly to a Service Recipient or indirectly through an Intermediary.
A fundamental condition of this ecosystem is that both intermediaries and service recipients must be “Non-residents” from a jurisdiction that has not been identified as a “High-Risk Jurisdiction” by the Financial Action Task Force (FATF). A limited exception allows for services to be provided to Indian residents, but only for the express purpose of establishing an office within the IFSC. This structure creates a “ring-fenced” global business ecosystem operating within India’s geographical boundaries.
The shift from a patchwork of circulars to a single, comprehensive regulation is a deliberate signal of regulatory maturation and a move to build long-term credibility. This forward-thinking approach positions GIFT-IFSC as a stable and reliable alternative to other, less-regulated offshore jurisdictions and aligns it with global best practices.
Comprehensive Analysis of Permitted Services and Their Application
The IFSCA (TechFin and Ancillary Services) Regulations, 2025, meticulously categorize and permit a wide range of services, effectively creating a complete financial services value chain from within GIFT-IFSC. The framework is not merely a list of allowed activities; it is a strategic design that enables a holistic ecosystem.
An IFSCA-based entity can operate end-to-end, from core financial functions to the entire support system, including legal, compliance, technology, and data management. This reduces reliance on fragmented service providers from different jurisdictions, simplifies operations for global clients, and enhances regulatory oversight for the IFSCA.
The TechFin Service Catalogue
The Second Schedule of the IFSCA (TechFin and Ancillary Services) Regulations, 2025, lists 24 permitted TechFin services, encompassing a wide array of technology-driven solutions. Each of these services is designed to directly or indirectly aid and assist in the functioning of the financial services industry within the IFSC.
- Accelerators, Agri Tech, Climate/Green/Sustainable Tech, Space Tech:
These categories encourage innovation in niche but high-growth sectors. An accelerator, for instance, provides a structured program to mentor new fintech startups, which in turn feeds the ecosystem with new technology-driven solutions.
- Artificial Intelligence (AI) and Machine Learning (ML):
These technologies are foundational to modern finance. As an example, an AI-driven credit scoring platform operating in the IFSC can be used by an IFSC-based banking unit. This platform leverages vast, non-traditional datasets to automate and enhance credit assessment processes for foreign corporate entities or high-net-worth individuals (HNIs) seeking credit.
The technology allows for more precise and faster lending decisions, while also providing a clear, auditable trail that is a key requirement for regulatory compliance with the IFSCA.
- Big Data Analytics:
This service provides a competitive edge to financial entities. A firm offering big data analytics to fund management entities in the IFSC would be a crucial tool for international asset management companies and sovereign wealth funds. By analyzing real-time, large-scale data, they can predict asset performance, optimize investment strategies, and model risk scenarios with greater accuracy, thereby enhancing their financial services offerings.
- Blockchain and Distributed Ledger Technology (DLT):
A DLT-based platform for cross-border payment settlements is an excellent example of this service. An IFSC banking unit would use this platform to reduce transaction costs and settlement times for a foreign business or multinational corporation with global operations.
The inherent transparency and immutability of the blockchain ledger help the bank with compliance by providing a clear audit trail and reducing the risk of fraud, which is crucial for IFSCA registration.
- Cloud Computing Services:
This is a foundational technology that underpins the operations of many entities in the IFSC. A company providing secure and scalable cloud infrastructure for a digital exchange operating in the IFSC ensures real-time data processing and high-frequency trading capabilities. The service provides the necessary scalability and resilience for handling high volumes of trades and data, while the provider’s security protocols ensure data integrity and compliance with IFSCA’s regulations on data localization and protection.
- Cybersecurity Solutions:
Given the digital nature of the IFSC, cybersecurity is a critical service. An entity offering advanced services like fraud detection and vulnerability assessments protects the digital infrastructure of a stock exchange in the IFSC and globally.
This ensures the exchange maintains a high standard of cyber resilience, proactively detecting and mitigating threats and protecting sensitive client data, which is a prerequisite for its operational license.
- Digital Identity and Biometrics:
A service provider offering a biometric-based digital identity verification system to an IFSC banking unit can streamline the client onboarding process. A bank would use this service to conduct digital Know Your Customer (KYC) checks for its international clients, enabling it to onboard them quickly and securely without a physical presence.
This enhances security and helps the bank meet its regulatory obligations under Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) norms, which are paramount for its IFSCA registration.
- Payments Infrastructure and Technology:
An intermediary like a digital bank in the IFSC relies on a firm that builds and manages a secure payment gateway for its core service of cross-border payments. This technology ensures the security and integrity of transactions, compliance with international payment standards (e.g., SWIFT), and real-time reconciliation, which are essential for the bank’s operational license and regulatory oversight by the IFSCA.
- Quantum Technology:
This is a forward-looking service for the most sophisticated financial entities. An intermediary, like a hedge fund, can use quantum computing to perform highly complex and rapid calculations for portfolio optimization and risk analysis. This allows the fund to identify and capitalize on arbitrage opportunities that are invisible to traditional computing methods, thereby delivering superior returns and demonstrating an advanced, technology-driven business model to the regulator.
- RegTech (Regulatory Technology):
This is a key business enablement service for an IFSC-based bank. A company providing a software solution automates compliance checks for AML/KYC regulations. This allows the bank to efficiently verify customer identities, monitor for suspicious activity, and generate regulatory reports, reducing human error and ensuring timely and accurate reporting to the IFSCA.
- SupTech (Supervisory Technology):
This service, which provides a technology solution to the IFSCA itself, signals a robust regulatory environment. The existence of such a provider within the IFSC encourages intermediaries to set up in the hub, as they know the regulatory body is technologically advanced and can offer a predictable and efficient oversight framework.
- Web 3.0 Technologies and Metaverse:
A firm that develops a virtual trading floor for an IFSC-based brokerage firm exemplifies this service.
This allows the brokerage to create a more engaging and accessible platform for its international clients for activities like client onboarding, virtual meetings with financial advisors, and interactive trading simulations, expanding its reach and enhancing the user experience.
- Insurtech, WealthTech, Green Fintech & ESG Solutions, Trade Finance Technology, Technology-based Support for Capital Markets, Technology Solutions, Tokenisation, Application Development:
These services address specific sub-sectors of the financial industry, using technology to optimize processes, improve efficiency, and ensure compliance.
GiftCityAdvisor’s Contribution
At GiftCityAdvisor, we specialise in helping businesses leverage the potential of the new regulations on TechFin & Ancillary Services.
Our expertise lies in guiding global investors and NRIs through the complexities of IFSCA registration and compliance frameworks. Based in Gift City Gandhinagar, we assist companies with entity setup, licensing, and regulatory fit checks. As trusted advisors, We “GiftCityAdvisor” simplify the process for firms planning to do office setup in Gift City Gandhinagar.
By combining policy insights with sector expertise, we ensure that your journey into TechFin & Ancillary Services is seamless, compliant, and strategically aligned with the opportunities created under the IFSCA registration regime.
The Ancillary Service Catalogue
The First Schedule of the regulations lists 28 permitted Ancillary services, which are professional support services essential to the functioning of a financial hub. These services, while not technology-driven, are critical for the operational viability and compliance of IFSC-based entities.
- Actuarial Services: An actuarial firm provides risk modelling, pricing, and valuation services to an IFSC-based insurance or reinsurance company. This is a crucial regulatory requirement for the business model, as it ensures products are priced correctly and liabilities are valued in a compliant and professional manner.
- Accounting, Auditing, and Taxation Services: A professional services firm offering audit and tax advisory services ensures a fund management entity’s financial records are transparent and accurate. This is a non-negotiable part of regulatory requirements, ensuring financial statements comply with international financial reporting standards (IFRS) and local tax laws.
- Compliance Management Services: These services are mandatory under the new regulations. A firm providing a full-time Compliance Officer to an IFSC-based insurance company ensures the company adheres to all regulatory obligations.
- Corporate Service Providers (CSP): A CSP provides a comprehensive suite of services, including company formation and administrative support, to a foreign entity looking to establish a presence in the IFSC. The CSP helps the entity navigate the administrative and legal requirements of registration, ensuring a smooth and compliant market entry.
- Fund Administration Services: A fund manager can outsource its critical back-office functions to a professional fund administrator. This allows the manager to focus on its core activity of investment management while ensuring all operational activities, from Net Asset Value (NAV) calculations to investor reporting, are handled with precision and in full compliance with IFSCA’s AIF regulations.
- Human Resources and Payroll Processing: A company providing a full suite of HR services to an IFSC-based fintech company allows the intermediary to focus on its core business while ensuring all employee-related activities are handled in compliance with local labour laws and regulations. These functions can be undertaken for international financial service providers, funds and fintech companies.
- Legal Services: A law firm with a presence in GIFT City provides legal advice and documentation for international M&A transactions. This is a fundamental requirement for ensuring all legal activities are compliant with both local and international laws, which is a prerequisite for maintaining a credible business model.
- Risk Management and Advisory Services:An intermediary, like a bank or an insurance company, can use these services to establish and maintain a robust risk management framework. By getting expert advice on risk assessment and mitigation, they can better understand and manage the various risks inherent in their business, which is a key component of their regulatory obligation and business model’s viability.
- Trusteeship Services: A fund or trust established in the IFSC is legally required to have a trustee.1 An intermediary would use a registered trusteeship service to ensure all fiduciary duties are performed in accordance with the trust deed and IFSCA regulations, thereby protecting the interests of beneficiaries and fulfilling legal obligations.
- Valuation Services: A valuation expert provides an independent assessment of the fair market value of complex financial instruments or private equity investments for an IFSC-based fund. This is a prerequisite for a credible business model, as it ensures valuations are fair, transparent, and compliant with regulatory standards.
- Other Ancillary Services: The list is extensive and includes Advisory Services, Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), Secretarial Services, and Supply Chain Management Support, all of which contribute to the operational efficiency and global competitiveness of entities in the IFSC.
IFSCA Permitted Services: A Catalogue of Opportunity
| Service Category | Description (from Notification/Excel) | Example of Application | Strategic Value-Add |
|---|---|---|---|
| TechFin Services | Cloud Computing | Providing secure and scalable cloud infrastructure and data storage solutions. | A digital exchange in the IFSC relies on this service for high-frequency trading and real-time data processing. |
| AI and ML | Solutions that aid and assist financial services leveraging artificial intelligence and machine learning. | An AI-driven credit scoring platform for an IFSC-based bank, used to assess the creditworthiness of a foreign borrower. | |
| DLT | Developing and maintaining a DLT-based platform for secure and transparent cross-border payment settlements. | An IFSC banking unit uses this platform to reduce transaction costs and settlement times for a foreign business. | |
| RegTech | Software solutions that automate compliance checks for Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. | An IFSC-based bank leverages this solution to efficiently verify customer identities and monitor for suspicious activity. | |
| Ancillary Services | Legal Services | Providing legal advice and documentation services to an IFSC-registered company for international M&A transactions. | A law firm in GIFT City provides legal counsel for a company’s cross-border litigation. |
| Auditing & Tax | Offering audit and tax advisory services to an IFSC-based fund manager.1 | A professional services firm ensures a fund manager’s financial statements comply with IFRS and local tax laws. | |
| Fund Admin. | Handling day-to-day operational activities for an Alternative Investment Fund (AIF) in the IFSC. | A fund manager outsources back-office functions like fund accounting and investor relations to a professional fund administrator.1 | |
| Compliance Mgt. | Providing a full-time Compliance Officer to an IFSC-based insurance company. | An intermediary engages a compliance management firm to ensure it has a dedicated and qualified Compliance Officer in the IFSC. |
Business Opportunities and Strategic Positioning
The IFSCA’s new regulatory framework presents a compelling value proposition for a diverse range of global and domestic players. By offering a strategic gateway to both international and Indian markets from a single, globally aligned location, GIFT-IFSC is rapidly emerging as a destination of choice.
Opportunities for Global Technology Companies
Global technology companies, particularly those in the fintech and financial services space, can leverage the unique advantages of GIFT-IFSC. A major draw is the unified regulatory environment, where the IFSCA consolidates the powers of four premier financial regulators—the RBI, the SEBI, the IRDAI, and the PFRDA.
This single-window governance model streamlines compliance, reduces delays, and provides a predictable, efficient oversight framework that is a significant advantage over operating in multiple jurisdictions with different regulatory bodies.
Furthermore, GIFT-IFSC’s innovation-centric approach, including a dedicated Regulatory Sandbox framework, allows entities to experiment with new technologies in a live environment with a limited set of real customers for a limited time. This provides a controlled space for testing groundbreaking solutions in areas like artificial intelligence and blockchain without the full burden of regulatory compliance from day one.
In addition to the regulatory benefits, companies can capitalize on India’s competitive cost structure and vast talent pool. India enjoys lower real estate and wage costs compared to established financial centres like Singapore, Dubai, London, and New York.
The nation’s demographic dividend and a large pool of professionally and technically skilled individuals make it a global hub for talent. Several global IT companies have already established techfin centres in GIFT City, a trend expected to drive significant employment and reinforce the city’s reputation as a technology hub.
Opportunities for Indian Export Service Providers
For Indian service providers, especially those in the Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) sectors, GIFT-IFSC offers an unprecedented opportunity to transition from serving a predominantly domestic market to becoming a full-fledged global player.
By setting up a unit in the IFSC, an Indian company gains a distinct legal and tax status, allowing it to compete with traditional offshore jurisdictions like Mauritius and Singapore.
The IFSCA’s strategic vision is to “re-route” financial services transactions that are currently conducted outside India back to Indian shores. This initiative aims to reclaim a significant portion of the estimated USD 50 billion per year that India is currently losing in financial services flows.
By establishing a base in the IFSC, Indian firms can act as an “offshore” legal entity, providing services like legal process outsourcing, knowledge process outsourcing, and data management to non-resident clients.
This strategic positioning allows them to integrate their offerings into the global financial services value chain from a fiscally and legally advantageous platform. The presence of a growing ecosystem of international banks, funds, and tech companies within the IFSC provides a ready market and a network of potential clients, further enhancing the appeal for Indian export service providers.
Impact on the Indian Economy
The development of GIFT-IFSC and the new TechFin and Ancillary Services regulations are not just about creating a financial hub; they are a strategic bet on India’s future economic trajectory.
The centre is designed to be a significant catalyst for economic growth and a key contributor to India’s long-term vision of becoming a global financial powerhouse and a developed nation by 2047.
Capital and Investment Flows
The IFSCA is focused on attracting a wide range of capital, from sovereign wealth funds to investments from the Indian diaspora. Data from the IFSCA chairman, Mr. K. Rajaraman, shows that investments from the Indian diaspora into GIFT City-based funds have already surpassed USD 7 billion.
A major sovereign wealth fund from the UAE, ADIA, has also established a presence, setting up a multi-billion-dollar fund to invest in India through the hub.
While these numbers are encouraging, it is important to contextualize the initial Foreign Direct Investment (FDI) data from GIFT City. As of mid-2023, the total FDI from the hub was only USD 102 million. This seemingly low number, when compared to the USD 17 billion from Singapore or USD 6 billion from Mauritius in the same period, can be misleading.
This apparent paradox is not a failure of the GIFT-IFSC model but rather a symptom of market inertia and historical dependencies on established offshore jurisdictions. The government is playing a long-game strategy, providing a superior, FATF-compliant alternative to these jurisdictions.
The initial low FDI figures are a starting point, and the significant NRI and sovereign wealth fund investments suggest that the model is already gaining traction among key stakeholder groups who see the long-term value.
The framework, with its fiscal and regulatory advantages, is systematically dismantling the historical reasons for routing capital through other offshore jurisdictions.
Job Creation and Talent Pool Development
The influx of financial and technology firms into GIFT-IFSC is expected to generate significant employment. The centre has already housed more than 100 foreign companies and is set to cross 1,000 registered entities. Global IT companies establishing techfin centres are expected to drive substantial job creation.
The existence of an IFSC also has the potential to reverse the “brain drain” by providing Indian professionals with global career opportunities while they continue to reside and work in India.
The strategic collaboration with foreign universities, which can establish campuses within the IFSC, is also creating a talent pipeline that will supply the growing ecosystem of financial and technology firms.
This synergy between a robust talent base and an innovative business environment reinforces the hub’s long-term sustainability and contributes to the broader goal of strengthening India’s services sector.
Taxation and Fiscal Benefits: A Comprehensive Review
The IFSCA has established a meticulously designed fiscal framework that makes GIFT-IFSC a globally competitive financial hub. The true value of the ecosystem lies not in a single exemption but in the cumulative, layered fiscal advantages that systematically remove financial friction at every stage of a business’s lifecycle.
This comprehensive approach is designed to attract a diverse range of business models, from technology startups to large multinational corporations.
Income Tax Exemptions
The cornerstone of the fiscal framework is the 100% income tax exemption available for 10 consecutive years out of any 15-year period for IFSC units. This provides unparalleled long-term predictability and profitability for businesses.
In addition, entities are subject to a reduced Minimum Alternate Tax (MAT) rate of 9%, significantly lower than the standard rate. The framework also offers concessional withholding tax rates, including a 10% rate on dividends paid to non-resident shareholders.
Indirect Tax Exemptions
A major advantage for entities operating within the IFSC is the exemption from Goods and Services Tax (GST). Services received by units in GIFT-IFSC or provided to other IFSC/SEZ units or offshore clients are exempt from GST. This is a critical cost-saving measure for businesses operating in a global context.
Transaction-Related Exemptions
The framework provides a number of transaction-related exemptions that enhance the efficiency and appeal of conducting business from the IFSC. These include:
- Capital Gains: For non-residents, income from the transfer of specified securities listed on IFSC exchanges is exempt from capital gains tax.
- Securities and Commodities Transaction Tax: Transactions executed on the GIFT-IFSC stock exchanges are exempt from both Securities Transaction Tax (STT) and Commodities Transaction Tax (CTT).
- Stamp Duty: Transactions, particularly in the aircraft and ship leasing and financing sectors, are exempt from state-level stamp duty for 10 years.
Summary of Key Fiscal and Tax Benefits
| Tax Category | Specific Benefit | Applicable Entity/Transaction |
|---|---|---|
| Income Tax | 100% income tax holiday | Units in the IFSC for 10 consecutive years out of 15 years |
| Reduced MAT | IFSC companies at a rate of 9% of book profits or Nil rate under section 115JB(6) | |
| Indirect Taxes | Exemption from GST | Services provided to or received by IFSC/SEZ units and offshore clients |
| Exemption from Custom Duty & Excise Duty | Goods and services within the IFSC | |
| Capital Gains | Exemption from Capital Gains Tax | Non-residents from the transfer of specified securities on IFSC exchanges |
| Transaction Taxes | Exemption from STT, CTT, & Stamp Duty | All transactions on IFSC exchanges |
| Withholding Tax | Concessional tax rate of 10% | Dividends paid to non-resident shareholders |
| Concessional tax rate of 10% | Interest income for NRIs on debt instruments | |
| Other Benefits | State Subsidies | For eligible capital and operational expenditures |
The combined effect of these exemptions and incentives creates a highly competitive fiscal environment. This comprehensive approach systematically removes fiscal friction, offering a stronger value proposition than a single, isolated tax benefit.
Conclusion and Future Outlook
The IFSCA (TechFin and Ancillary Services) Regulations, 2025, are a transformative step, marking India’s decisive entry into the competitive landscape of global financial hubs. The framework is more than a collection of rules; it is a meticulously crafted strategic blueprint that encourages innovation, ensures international compliance with standards like those set by FATF, and leverages India’s core strengths in technology, talent, and a competitive cost structure.
The regulations’ emphasis on a unified regulatory environment and a comprehensive, end-to-end service ecosystem positions GIFT-IFSC as a destination capable of hosting the entire financial services value chain.
While the foundational regulatory and fiscal framework is now firmly in place, challenges remain. The most significant of these is overcoming the global branding gap and market inertia that have historically favoured established jurisdictions like Singapore and Mauritius.
To accelerate growth, the IFSCA and the government should leverage the initial successes with the Indian diaspora and sovereign wealth funds as a powerful case study. A targeted global marketing campaign that highlights the hub’s regulatory maturity and cumulative fiscal advantages would be a crucial next step. The data on NRI investments and commitments from major institutional players provides compelling evidence that the model is sound and is beginning to gain traction among key stakeholder groups.
The development of GIFT-IFSC is a long-term strategic asset that is vital for India’s economic future and its ambition to contribute significantly to the global financial landscape. The IFSCA TechFin and Ancillary Services Regulations 2025 are a game changer for businesses looking to set up shop in Gift City Gandhinagar. With these new regulations, Techfin & Ancillary Setup Services are streamlined, making it easier than ever to navigate the financial landscape. Plus, if you need guidance, GiftCityAdvisor is there to help you every step of the way. It’s an exciting time to be part of this growing hub!
IFSCA Official
Visit the official International Financial Services Centres Authority (IFSCA) portal for the latest TechFin and Ancillary Services Regulations, 2025.
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