GIFT City: an international balance sheet without leaving India
India's international financial services centre lets established companies bank in foreign currency onshore. For exporters and groups with overseas subsidiaries, it is worth understanding.
For decades, an Indian company that wanted a foreign-currency facility went to Singapore, Dubai or London. The International Financial Services Centre at GIFT City in Gandhinagar was built to bring a meaningful part of that business onshore.
What GIFT City is
The International Financial Services Centres Authority was established on 27 April 2020 under the IFSCA Act, 2019, as a unified regulator for banking, capital markets, insurance and funds within the IFSC. Entities operating there are treated, for most foreign-exchange purposes, as though they were offshore — while being physically in India and subject to an Indian regulator.
What IFSC Banking Units offer
Many Indian and international banks have established IFSC Banking Units at GIFT City. These branches operate in foreign currency and offer corporate lending, trade finance and treasury services — including external commercial borrowings to Indian companies and loans to the overseas subsidiaries and joint ventures of Indian groups.
For an Indian borrower, an IBU can combine the pricing of an international facility with the familiarity of a lender that already knows its domestic banking history.
Who should look at it
GIFT City is most relevant to three types of company: exporters with foreign-currency revenue who can service foreign-currency debt without taking an open currency position; groups with overseas subsidiaries that need funding abroad; and companies raising ECB who want to compare IBU pricing against lenders in other jurisdictions.
It is not a substitute for a domestic working capital relationship, and it does not remove currency risk from a business that earns only in rupees. It is one more lender pool — and, for the right company, one that is well worth including in the comparison.
This article is general information about the financing landscape, current as of its publication date. It is not financial, legal or tax advice; regulations change, and every company’s position is different.
