One of the questions NRI investors and institutional participants ask most frequently about GIFT City is: who regulates it? Is it SEBI? Is it RBI? Is it both?
The answer is neither, and both. GIFT City has its own dedicated unified regulator: the International Financial Services Centres Authority, or IFSCA. This is one of the things that makes GIFT City genuinely different from investing through mainstream Indian financial markets.
This post explains what IFSCA is, what powers it holds, how it regulates different product categories within GIFT City, and what investor protections apply.
Key Takeaways
- IFSCA (International Financial Services Centres Authority) was established in April 2020 under the International Financial Services Centres Authority Act, 2019.
- IFSCA is a unified regulator: it exercises the powers of SEBI, RBI, IRDAI (insurance), and PFRDA (pension) within the IFSC. GIFT City participants deal with one regulator, not four.
- All financial services within GIFT City IFSC operate under IFSCA oversight, including banking (IBUs), fund management (AIFs, mutual funds), insurance (IFSC offices), and capital markets.
- IFSCA and SEBI are separate regulators with separate jurisdictions. A fund registered with IFSCA at GIFT City is not under SEBI oversight. SEBI’s jurisdiction covers mainland Indian markets.
- Budget 2025 extended IFSCA’s regulatory framework and incentive period through March 2030, providing long-term policy certainty for GIFT City participants.
What Is IFSCA?
The International Financial Services Centres Authority (IFSCA) is a statutory body established under the International Financial Services Centres Authority Act, 2019, by the Government of India. It commenced operations in April 2020, initially at GIFT City (GIFT IFSC) in Gujarat.
IFSCA was created to address a specific problem. Before IFSCA existed, the various financial activities happening within the IFSC were regulated by multiple different regulators: SEBI for securities markets, RBI for banking and foreign exchange, IRDAI for insurance, and PFRDA for pension products. A fund manager setting up at GIFT City had to deal with all four regulators for different aspects of their operations.
IFSCA merged all of this into a single window. A fund management entity, a bank, an insurance company, and a stockbroker operating in GIFT City all deal exclusively with IFSCA. This single-regulator model is comparable to how DIFC (Dubai International Financial Centre) operates with the DFSA, or how Singapore operates with the MAS.
IFSCA is not a lighter regulation. It is a unified regulation. Within GIFT City IFSC, regulatory standards for fund management, banking, and insurance meet or exceed international standards in many areas. The convenience is the single-window approach, not reduced oversight.
What IFSCA Regulates at GIFT City
| Activity | Who Regulates in Mainland India | Who Regulates at GIFT City IFSC |
| Stock broking and trading on IFSC exchanges | SEBI | IFSCA (exercises SEBI powers within IFSC) |
| Fund management (mutual funds, AIFs, PMS) | SEBI | IFSCA |
| Banking and deposit-taking (IBUs) | RBI | IFSCA (exercises RBI powers within IFSC) |
| Insurance (IFSC offices) | IRDAI | IFSCA (exercises IRDAI powers within IFSC) |
| Capital market intermediaries (brokers, advisers, custodians) | SEBI | IFSCA |
| Foreign exchange transactions within IFSC | RBI under FEMA | IFSCA for intra-IFSC; FEMA applies for INR-foreign currency transactions |
| FinTech and ancillary services in IFSC | Multiple regulators | IFSCA (expanded mandate) |
IFSCA vs SEBI: Important Distinctions for Investors
If you invest in a mutual fund registered on mainland India with SEBI, SEBI’s investor protection framework applies. If you invest in a fund domiciled at GIFT City IFSC, IFSCA’s framework applies. These are different regulatory environments.
For NRI investors
When you open an account with a GIFT City intermediary or invest in a GIFT City-domiciled AIF or mutual fund, you are operating within IFSCA’s jurisdiction. IFSCA provides investor protection mechanisms including complaint redressal systems, mandatory disclosures for intermediaries, and oversight of fund management entities.
For resident Indians
When a resident Indian invests in GIFT City through the LRS route, they are investing in an IFSCA-regulated vehicle. However, for tax and FEMA purposes, the investment is still treated as an overseas investment and must be disclosed in Schedule FA of the ITR. SEBI’s investor protection framework (like SEBI SCORES for complaints) does not apply to IFSCA-regulated entities.
Complaint redressal
Complaints against IFSCA-regulated entities at GIFT City are addressed through IFSCA’s own complaint resolution mechanism, not through SEBI SCORES. IFSCA has a dedicated portal for complaints and queries. Check the IFSCA website (ifsca.gov.in) for current complaint procedures before investing if you want to understand the grievance process.
IFSCA’s Key Regulatory Actions Since 2020
Fund management framework
IFSCA introduced a Fund Management Regulations framework in 2022 that simplified how AIFs, PMS, and mutual funds can be set up at GIFT City. The regulations created three categories of Fund Management Entities (FMEs): Registered, Authorised, and Notified, with different requirements based on the type of fund they manage.
AIF minimum investment reduction
In February 2025, IFSCA reduced the minimum investment for AIFs at GIFT City from USD 150,000 to USD 75,000. This made GIFT City AIFs more accessible to NRI investors who previously found the minimum too high relative to SEBI-regulated domestic AIFs at Rs. 1 crore.
GIFT City mutual funds for non-residents
IFSCA approved a framework for GIFT City-based mutual funds to accept non-resident investors in foreign currency. Tata Asset Management launched the first GIFT City mutual fund for non-residents in September 2025 with a minimum of USD 500. This is an IFSCA-regulated product, not a SEBI-registered scheme.
Budget 2025 extension
The Union Budget 2025 extended the tax holiday for IFSC units under Section 80LA through March 31, 2030, and extended several IFSCA regulatory frameworks. This provided businesses and investors with 5 years of policy certainty, significantly reducing regulatory uncertainty for long-term GIFT City investments.
Investor Protections at GIFT City Under IFSCA
IFSCA has established several investor protection mechanisms:
- Mandatory disclosure requirements for all IFSCA-registered intermediaries: similar to SEBI disclosure obligations but calibrated for international investors.
- Fit and proper criteria for all Fund Management Entities, similar to SEBI’s registration process, ensuring only qualified and compliant entities operate.
- Mandatory client agreements with key terms disclosed (similar to the MITC framework SEBI introduced for RIAs and RAs).
- Complaint redressal through IFSCA’s own portal at ifsca.gov.in.
- International cooperation agreements: IFSCA has signed MoUs with foreign regulators including MAS (Singapore), DFSA (Dubai), and FSA (Japan) for regulatory cooperation.
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Frequently Asked Questions
What is IFSCA and what does it regulate?
IFSCA stands for International Financial Services Centres Authority. It is a statutory body established in April 2020 under the IFSCA Act, 2019 by the Government of India. IFSCA is the unified regulator for all financial services activities within India’s IFSC, currently located at GIFT City, Gujarat. It exercises the combined powers of SEBI (securities markets), RBI (banking), IRDAI (insurance), and PFRDA (pension) within the IFSC, acting as a single-window regulator for all financial services participants at GIFT City.
Is IFSCA the same as SEBI?
No. IFSCA and SEBI are completely separate regulatory bodies with different jurisdictions. SEBI regulates securities markets on mainland India (NSE, BSE, SEBI-registered mutual funds, PMS, AIFs, brokers, and intermediaries operating in India). IFSCA regulates all financial services within the IFSC at GIFT City. A fund registered at GIFT City under IFSCA is not subject to SEBI oversight, and vice versa. If you have a complaint about a SEBI-registered entity, you go to SEBI SCORES. If you have a complaint about an IFSCA-registered entity at GIFT City, you go to IFSCA’s portal.
Does IFSCA provide investor protection for NRIs investing at GIFT City?
Yes. IFSCA has established investor protection frameworks including mandatory disclosure requirements for intermediaries, fit and proper criteria for fund management entities, complaint redressal mechanisms through ifsca.gov.in, and mandatory client agreements. These protections are designed for the international investor base that GIFT City primarily serves. However, IFSCA’s investor protection framework is separate from SEBI’s. NRIs investing through GIFT City should familiarise themselves with the IFSCA complaint process before investing.
What is a Fund Management Entity (FME) in GIFT City?
A Fund Management Entity (FME) is an IFSCA-registered entity licensed to manage investment funds at GIFT City IFSC. Under IFSCA’s 2022 Fund Management Regulations, FMEs come in three categories: Registered FMEs (for regulated funds including AIFs and venture capital funds), Authorised FMEs (for schemes open to accredited or institutional investors), and Notified FMEs (for retail schemes including mutual funds). Each category has different minimum net worth requirements and compliance obligations.
Can I file an SEBI complaint about a GIFT City investment?
No. SEBI’s jurisdiction does not extend to IFSCA-regulated entities at GIFT City. If you have a complaint about a GIFT City-based fund, broker, or bank, the correct forum is IFSCA’s complaint redressal mechanism, accessible through ifsca.gov.in. If your complaint involves a SEBI-regulated entity that connected you to a GIFT City investment (such as a mainland Indian distributor or registered intermediary), you may be able to file against that entity with SEBI, but the GIFT City fund itself remains under IFSCA jurisdiction.
What is the difference between investing through SEBI-regulated products and IFSCA-regulated products?
SEBI-regulated products (Indian mutual funds, PMS, AIFs) are denominated in Indian Rupees, regulated under SEBI’s framework, and fall under SEBI’s investor protection and complaint systems. IFSCA-regulated products at GIFT City are denominated in foreign currency (USD, GBP, EUR), regulated under IFSCA’s framework, and fall under IFSCA’s complaint systems. Both regulatory frameworks are rigorous. The key practical differences are currency, tax treatment (GIFT City benefits apply to non-residents), and applicable regulatory framework for investor protections.
Did Budget 2025 change anything about IFSCA’s mandate?
Budget 2025 extended the income tax holiday for IFSC units under Section 80LA through March 31, 2030. It also approved several IFSCA regulatory enhancements including: allowing mutual funds and ETFs to relocate from offshore locations to GIFT City without capital gains tax on the relocation (effective April 2026), expanding IFSCA’s remit to cover additional financial services categories including FinTech entities, and confirming IFSCA’s regulatory authority over family office structures setting up at GIFT City.
| Topic | URL and Anchor Text |
| GIFT City Explained | GIFT City explained: benefits and opportunities |
| GIFT City Tax Benefits | tax benefits of investing through GIFT City IFSC |
| Bonds and Fixed Deposits | explore bonds and fixed deposit options |
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Fortune Wealth is a SEBI-registered investment firm and AMFI-registered mutual fund distributor in Mumbai with over 25 years of experience. Reach out at fortunewealth.in.
