The International Financial Services Centres Authority Act, 2019 — Act 50 of 2019, assented on 19 December 2019 and commenced in three tranches through 2020 — solved a coordination problem. Since 2015, four regulators had governed a single square kilometre at GIFT City. Section 13 vested their powers in one authority; the Second Schedule surgically excised those powers from fourteen parent statutes. Elegant drafting, resting on a narrow foundation.
From expansion to supervision
Six years on, the question is no longer whether the unified model works, but what the Authority has done with it — and the past eighteen months show an institution turning from salesmanship to supervision.The first generation of regulations, between 2020 and 2022, was frankly expansionary: banking, bullion, fund management, aircraft and ship leasing, foreign branch campuses. The second generation, from 2025, is consolidative. The Fund Management Regulations, 2025 repealed the 2022 framework. The Capital Market Intermediaries Regulations, 2025 replaced the 2021 regime and were expressly benchmarked against IOSCO’s core objectives of securities regulation. Bullion Market, Global In-House Centres and KYC Registration Agency rules were remade in the same cycle.At its 29th meeting on 24 July 2026, the Authority approved a unified market-abuse code covering insider trading and fraudulent and manipulative practices. That a financial centre operated for eleven years before acquiring a bespoke market-abuse framework is itself a comment on sequencing: the enclave was built to attract capital first and to police it afterwards.Two further decisions there deserve attention beyond the trade press. The Electronic Trading Platform Regulations, 2026 were framed under Section 45W of the Reserve Bank of India Act read with Section 13(1) of the IFSCA Act — the borrowed-power technique working precisely as drafted, and a reminder that IFSCA exercises almost no original jurisdiction of its own. And the revamped International Branch Campuses Regulations permit foreign universities to collect student fees in rupees, subject to conversion into a permitted foreign currency within a specified window. Section 20 of the Act requires transactions of financial services in an IFSC to be in foreign currency. This is the first significant, if pragmatic, softening of that principle.The supervisory turn is not rhetorical. Certification norms for key managerial personnel and revised anti-money-laundering guidelines both landed in August 2026, and around ten entities have received show-cause notices over substance and operational failures. The Authority has also had to direct entities to keep their Letters of Approval under the Special Economic Zones Act, 2005 subsisting at all times — a firm can be IFSCA-compliant and SEZ-defective at once, because Section 2 ties its jurisdiction to Section 18 of that Act rather than letting it stand alone.
A fiction becomes law
The fiscal and exchange-control architecture has meanwhile been re-enacted, not merely extended. Section 147 of the Income-tax Act, 2025 now replaces Section 80LA. The Finance Act 2026 lengthened the holiday to twenty consecutive years out of twenty-five, fixed post-holiday business income at 15 per cent and, crucially, restricted the benefit for units commencing on or after 1 April 2026 to those not formed by splitting up, reconstruction or transfer of an existing Indian business. That anti-splitting condition is what distinguishes an industrial policy from an arbitrage, and it should be defended vigorously the next time it is lobbied against.On the currency side, the Seventh Amendment to the Foreign Currency Accounts Regulations, effective 6 October 2025, confirmed that accounts permitted outside India may equally be opened in an IFSC. The Corporate Laws (Amendment) Bill, 2026 goes further, requiring IFSC companies to issue and maintain share capital in permitted foreign currency and creating a distinct category of Specified IFSC limited liability partnerships. The deeming fiction of 2015 — that a GIFT unit is a person resident outside India — is now being written into company law itself.The numbers have followed. As of March 2026, GIFT reports 1,147 registrations, banking assets above $111 billion, cumulative fund commitments near $39 billion and 410 aviation and ship assets leased. In the Global Financial Centres Index it has climbed to 43rd.Yet the composition of that growth is telling. GIFT has real depth in leasing, treasury operations and bullion — businesses that are asset-heavy, contract-light and comparatively free of litigation. It has far less in origination, structured credit or globally mandated asset management. Those are precisely the businesses that generate disputes, and disputes are where GIFT is weakest.
Three deficits, and a fourth
The first is the fused mandate. Section 12(1) charges the Authority to develop and regulate. Every mature securities regulator has learnt that these pull in opposite directions; a body judged by registration counts will eventually flinch from enforcement. The Performance Review Committee under Section 17 is composed of the Authority’s own members and cannot answer this. Hiving the promotional function into a separate development agency would cost little and buy much credibility.The second is independence. Section 21 binds the Authority to Central Government directions on policy, with the Government the final judge of what policy is; Section 22 permits supersession for six months. Renewable three-year terms compound the difficulty.A single fixed, non-renewable term of five years, and a tighter Section 21, would bring the Authority closer to what international counterparties expect.The third, and gravest, is adjudication. The Sahoo Committee proposed letting parties choose an IFSC as seat and elect foreign governing law; a dedicated High Court bench; then a statutory IFSC International Court; and finally foreign judges — a phase it concedes would need constitutional amendment. Dubai and Abu Dhabi offer their own courts, their own statutes and their own benches. GIFT offers Indian law and an Indian High Court. Until Parliament moves, that gap will be priced in by every counterparty drafting a governing-law clause.There is a quieter fourth problem, and it is not IFSCA’s to solve. Approvals for family investment funds were paused after the Reserve Bank’s concerns about capital-control leakage. The Authority may liberalise inside the wall; the door between enclave and mainland remains the central bank’s. No volume of regulation-making resolves that.The Act was drafted for a project that needed to begin. What it now governs is a centre that needs to be trusted. Trust in a financial centre is not manufactured by tax holidays. It is built by predictable adjudication, credible enforcement and a regulator visibly indifferent to its own growth statistics. The rule changes of the past year suggest that IFSCA has understood this. The statute under which it operates has not yet caught up.
Disclaimer: Views expressed above are the author’s own.