GIFT City: Turning offshore finance into a domestic asset

Earlier this month, K Rajaraman, chairman of the International Financial Services Centres Authority, noted that the infrastructure is now in place for Indian companies to look inward rather than toward the Cayman Islands or similar low-tax jurisdictions. He, indeed, echoed the sentiment of thousands of global investors, who are now increasingly looking towards India’s GIFT city. This also includes NRIs, who have traditionally relied on Singapore, Dubai, or London. But now they have a reason to be a part of India’s growth story. Most of them want dollar access, regulatory certainty, tax efficiency, and the convenience of an Indian legal framework. GIFT City is offering all that and more.GIFT City is no longer just a project on a map. It is a deliberate creation of an ecosystem that is bringing together regulatory, fiscal and infrastructural components together at one place to help India compete with long-established financial centres like Singapore and Dubai, among others. The idea is simple: bringing global capital flows into India by offering international financial services and tax advantages of off-shore destinations. In that sense, GIFT City is India’s bold economic statement to investors across the globe.From capital exporter to capital hostIt is no secret that for years, Indian businesses and NRIs, as well as global investors relied on offshore locations like Singapore, Dubai or London to manage foreign currency assets, raise capital, or access global markets. This not only resulted in missed opportunities for domestic value creation but also meant capital outflows and regulatory fragmentation. At its core, GIFT City has been designed to solve this structural gap in India’s growth journey.By creating India’s first International Financial Services Centre (IFSC), GIFT City has effectively brought offshore finance onshore. The result is a platform based in India where global banking, insurance, asset management, fintech and capital markets can operate in foreign currency, under a unified regulator, with globally competitive tax and compliance structures. This shift has far-reaching implications for the economy. Capital that once bypassed India is now being retained and reinvested within the country.GIFT City’s tax architecture is built to be competitive while targeted. IFSC units can claim a 100 per cent income-tax exemption for any ten of the first fifteen years of operation. This itself is a powerful incentive for new global operations to set up here. More importantly for cross-border investors, transactions executed on IFSC exchanges are exempt from the securities and commodities transaction taxes. While they may seem like small concessions, if you look at the larger picture, they considerably lower the cost of doing international business from India, thereby making dollar-denominated investment products viable onshore. One of GIFT City’s most impactful moves is to permit transactions in freely convertible foreign currencies, anchored in the US dollar. What does this mean for NRIs, family offices and institutional investors with overseas liabilities? It means they get access to dollar-denominated instruments inside an Indian jurisdiction. So no more currency mismatch headaches and hedging costs for them. So between onshore and offshore, this creates a “mid-shore” solution which combines the economic and currency convenience of offshore markets with the legal recourse of India’s courts and corporate law. For life-insurance-backed dollar investments, pension solutions, and cross-border treasury operations, this is a transformative idea.The contribution of GIFT City to the economy goes well beyond banking balance sheets. Its design allows for the development of entirely new financial verticals that India historically lacked at scale. Aircraft leasing, global reinsurance, bullion exchanges, offshore fund management, dollar-denominated insurance products, and international fintech innovation are all finding a home here. Each of these activities has a multiplier effect. They generate high-value employment, deepen technical expertise, attract foreign institutions, and stimulate demand for legal, compliance, technology, analytics and professional services. In effect, GIFT City is helping India move up the value chain from being a consumer of global finance to a producer of it.A catalyst for insurance, wealth and long-term capitalFrom an insurance and wealth perspective, GIFT City is unlocking long-term economic value. International insurance structures, global investment-linked products, and cross-border wealth solutions are becoming possible in ways that were previously impractical.This matters because long-term capital is the backbone of economic stability. When savings are channelled into productive global assets through regulated domestic platforms, it enhances resilience at both household and macroeconomic levels. Over time, this also supports India’s pension systems, retirement planning frameworks, and intergenerational wealth creation.It is tempting to compare GIFT City with global hubs like Singapore or Dubai. But the more meaningful comparison lies in intent. Those centres evolved over decades. GIFT City has been architected with the benefit of hindsight, global best practices, and India’s own scale advantage. Its success will not be measured only by assets under management or the number of institutions operating there, but by how effectively it integrates India into the global financial system.Every global financial hub goes through phases of experimentation, calibration, and consolidation. GIFT City is no different. But the direction is unmistakable. GIFT City is going to be a foundational pillar of our next growth chapter. If sustained with consistency and collaboration, GIFT City will not just mirror international financial hubs, it will redefine what a modern, inclusive, and globally connected financial ecosystem from India can look like.Contributed by Vivek Jain, Chief Business Officer, Life Insurance, Policybazaar.com. 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