Legal & Compliance Requirements for Foreign Companies in GIFT City

Gujarat International Finance Tec-City (GIFT City) is India’s smart city for finance. It is also an International Financial Services Centre (IFSC). It is designed to be a global financial hub. GIFT City gives foreign investors a great chance to grow their business in India. It has good infrastructure, tax breaks, and a business-friendly environment. But starting a business here means you must follow legal rules and procedures.

In this blog, we explore the core legal and regulatory steps foreign companies need to take to operate successfully in GIFT City.

• How foreign companies can follow the legal steps in GIFT City
• Key points about FDI (Foreign Direct Investment) rules
• How to get licenses and follow the rules for different sectors
• The documents foreign companies must prepare
• The ongoing compliance tasks like tax filing, AML/KYC, and reports
• Helpful tips for global companies to succeed in India’s first IFSC

Why Foreign Companies Like GIFT City

Foreign Investment in GIFT City is growing. This is because of its simple rules and modern infrastructure. The city is managed by one main authority—IFSCA. This makes it easier for companies to do business here.

Here are some key benefits:

• 100% tax break for 10 out of 15 years
• No GST on services offered to clients outside India
• Full profit and capital repatriation allowed
• No stamp duty
• Easy FDI rules and SEZ benefits
• Quick approvals via SWIFT portal

These make GIFT City a smart choice for global companies coming to India.

GIFT City hosts over 31 global and Indian banks, more than 140 Alternative Investment Funds (AIFs), and about 80+ capital market intermediaries. Leading global financial institutions such as HSBC, Bank of America, and JPMorgan Chase have established operations here. (Source)

In addition, NRIs have invested more than USD 7 billion into GIFT City-based funds as of 2024. (Economic Times)

FDI Rules Made Easy

GIFT City follows India’s FDI policy but makes it easier with some extra benefits. Foreign Direct Investment (FDI) is a big part of how international companies bring in capital. The government wants to make it easy for companies to invest in India, especially in special zones like GIFT City.

1. Automatic Route: Most financial sectors allow 100% FDI without government approval.
2. Easy Repatriation: Companies can take out profits and capital with fewer formalities.
3. Relaxed Rules: Foreign investors can invest funds, fintech firms, and financial services.
4. No Restrictions on Sectors: Unlike other parts of India, GIFT City does not have strict sector-specific caps for foreign investment in most financial activities.

Gujarat attracted USD 7.3 billion in FDI during FY 2023–24, a 55% jump from the previous year, positioning it as India’s second-highest FDI recipient after Maharashtra. (Economic Times)

Business Structure Choices

Foreign companies can choose different ways to enter GIFT City. Choosing the right business structure is one of the first and most important decisions:

• Branch Office: Best for foreign banks or insurers. A branch operates as an extension of the parent company.
• Wholly Owned Subsidiary (WOS): For full control of the business. It is a separate legal entity.
• LLP (Limited Liability Partnership): Great for flexibility and tax savings, often used by funds.
• Representative Office: Good for research or talking with clients. These cannot generate income in India.

Each type has different rules, tax impacts, and operational pros and cons. Getting expert advice can help choose the best option for your goals.

Getting a License

Before starting, companies must register and get a license from IFSCA. This applies to all financial service activities. Licensing requirements vary by industry:

• Banking: Follow IFSCA Banking Rules, 2020
• Insurance: Follow IFSCA Insurance Rules, 2021
• Capital Markets: Follow SEBI and IFSCA rules
• Fund Management: Follow IFSCA Fund Rules, 2022

Steps in the process:

• Share your business plan with financial forecasts
• Provide company documents and incorporation proof
• Submit board resolution and Power of Attorney
• Show your AML and KYC system to protect clients
• Prove you have enough capital for operations

IFSCA then reviews and issues a Certificate of Registration. Once this is granted, the business can start operations.

GIFT City Explained: Who Regulates It – IFSCA, SEBI, RBI & IRDAI

Documents You’ll Need

Compliance for Foreign Companies begins with the right paperwork. Each document must be prepared and submitted in the proper format. Here’s a checklist:

• Certificate of Incorporation (Notarised and Apostilled)
• Company bylaws (MOA & AOA)
• Board resolution to open a branch or office
• Power of Attorney for India-based representative
• ID proof for directors/shareholders
• Business plan with projected financials
• Lease agreement for GIFT City office space
• Letter of Allotment (PLOA) from the SEZ developer

Documents from outside India must be notarised and apostilled. Having incorrect or incomplete paperwork can cause delays.

Ongoing Compliance Rules

Following the rules helps your business run smoothly and builds trust with clients and regulators. Here are the main compliance tasks:

Reports to Authorities:

• File quarterly and yearly reports to IFSCA
• Submit financial statements and compliance certificates
• File SEZ-related reports and updates

Tax Matters:

• File income tax after the 10-year tax holiday ends
• Submit GST exemption declarations
• Maintain transfer pricing documents if your company has global branches

AML & KYC Policies:

• Build strong internal control systems
• Train staff on anti-money laundering procedures
• File suspicious activity reports if needed

Annual Report:

• Submit Annual Performance Report (APR) to the SEZ Commissioner with financial data and export earnings

Being consistent with these tasks will help your company stay in good standing with the regulators.

Things to Watch Out For

GIFT City offers many benefits, but there are still challenges that companies need to consider:

• Changing Rules: Policies are still evolving, and businesses need to stay up to date.
• Compliance Costs: Setting up operations and following rules can cost money.
• Unclear Guidelines: Some areas may not yet have fully defined rules, and you may need to request guidance.
• Document Delays: Getting foreign documents notarised and apostilled can take time.

It is smart to work with local consultants who understand the system. This can help avoid mistakes and speed up the setup process.

Conclusion

GIFT City is a great place for global companies. It offers tax benefits, fewer rules, and access to India’s financial markets. But to enjoy these perks, companies must follow the legal steps and stay compliant.

You must:

• Understand the FDI rules
• Choose the right business structure
• Get the proper licenses
• Submit the right documents
• Keep up with regular filings and reports

GIFT City is more than just a location—it’s your doorway to global business in India. If you want to take full advantage of what GIFT City has to offer, you must be prepared, informed, and compliant.

Need professional guidance to navigate GIFT City’s legal, regulatory, and compliance ecosystem? Let FinGuruIndia be your trusted partner every step of the way.

📞 Contact us: +91-9999127022
🌐 Visit: www.finguruindia.com

Read Article: Step-by-Step Process for Business Setup in GIFT City (2025)