GIFT City showcases efforts to foster India’s fintech vision

By Anu Tiwari and Pallavi Rao, Cyril Amarchand Mangaldas

The fintech industry plays a pivotal role in India’s vision to become a global financial hub. With that goal in mind, the government and the International Financial Services Centres Authority (IFSCA) have been progressively introducing regulatory and policy reforms to Gujarat International Finance Tec-City (GIFT City) – a designated international finance service centre – to foster a healthy fintech ecosystem.

A regulatory sandbox was introduced to the city in October 2020, covering fintech players operating in specified financial services including banking, insurance, capital markets and pensions. The regulatory framework was aimed at creating a nurturing fintech ecosystem and to assist the fintech entities in gaining access to market data, which are not readily available to new entrants in the financial sector.

Fintech Incentive Scheme

Cyril Amarchand Mangaldas Anu Tiwari
Anu Tiwari
Cyril Amarchand Mangaldas

Subsequently, the IFSCA came out with its Fintech Incentive Scheme on 2 February to provide thematic grants to eligible domestic and foreign fintech entities. The scheme formulated a structure, which included six types of grants including the fintech startup, proof of concept, sandbox, green fintech, accelerator and listing support grants, to provide capital to help infancy-stage startups and fintech entities to scale up. The scheme is meant to provide an investment pipeline to the fintech entities based in the services centre, known as GIFT City, at each step of their expansion and growth.

In addition, the IFSCA has introduced a framework for fintech entities operating in international finance service centres dated 27 April that focuses on a liberal regulatory environment with the objective of redefining innovation and access to global markets. The framework maps out the process for eligible domestic and foreign entities wanting to set up operations in IFSCs to receive authorisation from a unified regulator.

Further, the framework acts as a gateway for the eligible domestic and foreign fintech entities to enter the special regulatory sandbox, the innovation sandbox and the inter-operable regulatory sandbox, or allowing them to benefit from any overseas regulatory referral mechanism or fintech bridge.

The framework also offers a route for fintech firms seeking regulatory authorisation for products and services that are not directly regulated in the domestic regulatory sphere. This will act as a platform for fintech entities to test and explore the new business model and products, including new products such as brand tokens, smart contracts, etc. It also provides comfort for other regulated entities to enter into financial transactions with them.

Regulatory frameworks

Pallavi Rao Cyril Amarchand Mangaldas
Pallavi Rao
Cyril Amarchand Mangaldas

To supplement the growth of the fintech ecosystem in the GIFT City, the IFSCA released the draft IFSCA (Setting up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022 on 30 June, with the aim of enabling world-class foreign universities or other foreign educational institutions to set up international branch campuses and offshore education centres there, offering courses on financial management, fintech, science, technology, etc.

This endeavour, combined with the 2020 New Education Policy, will help in the training and development of specialised technical skills that can serve the fintech ecosystem. In addition to the specific regulatory frameworks and incentives offered by the government for fintech entities operating in IFSC, several fiscal and non-fiscal incentives (including tax benefits) have been made available to the fintech ecosystem in GIFT City.

These incentives and regulatory frameworks have encouraged companies to commence their operations more quickly, in turn contributing to the ease of doing business. Several fintech entities have already been given authorisation from the IFSCA for undertaking innovative activities in areas such as agritech, insurtech, quantumtech, digital identity, and blockchain-based business solutions.


IFSCA-led initiatives have rightly placed the needs of the fintech industry as a priority, and provided a nurturing environment for fintech firms to contribute to India’s vision of a global financial hub. The incentives and the frameworks have reinforce the faith of the fintech entities in India’s vision to develop the GIFT City as the hub of financial innovation and technology, and is likely to attract both domestic and foreign fintech entities willing to do business in India.

Anu Tiwari and Pallavi Rao are partners at Cyril Amarchand Mangaldas. Senior associate Ganesh Gopalakrishnan and associate Shrish Gautam also contributed to this article

Cyril amarchand

Cyril Amarchand Mangaldas
Peninsula Chambers

Peninsula Corporate Park
Lower Parel
Mumbai 400 013, India


Contact details:
Tel: +91 22 2496 4455