Public comments on the IFSCA (GIC) Regulations, 2020

Public comments for the proposed amendment in the IFSCA (GIC) Regulations, 2020 S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

1 2. Definitions (1)(c) “financial services group” Inclusion of ‘Limited Liability Partnership’ LLP structure is organised and operates on the shall mean any entity which is (“LLP”) and ‘private trust’ in the definition of basis of an agreement and provides flexibility regulated by a financial services financial services group without imposing detailed legal and procedural regulator or any other competent requirements. The structure is commonly used body regulating financial services in GIFT IFSC enabling applicant to combine activities in its home jurisdiction and with financial risk capacity in an innovative include its holding, subsidiary or and efficient manners.

associate companies, branch, or subsidiary of a holding company to Additionally, private trust structure can be which it is also a subsidiary. permitted reducing the compliances norms

Provided that in case of any doubt as which will encourage investors. to whether the group constitutes a “financial services group” or any Further, financial services group also includes entity within the group qualifies as LLP structure and private trust to operate the such, an application may be made to business activities the Authority for determination, whose decision shall be final.

2 2. Definitions (1) (e) “Global In-House Centre” To broaden the scope of the Global In-house At present as per the IFSCA(GIC) Regulation, means a unit set up in the Centre (GIC) so that it can offer support services 2020, a GIC unit is permitted to provide International Financial Services to any financial institution, rather than being support services, directly or indirectly, to the Centre for providing support limited to its financial services group. entities of the financial service group.

services, directly or indirectly, to Therefore, the following modifications as entities within its financial services indicated in amber should be made in clause 1(e) The financial service group comprises of any group, including but not limited to of Regulation 2 and sub-regulation (1) of entity which is regulated by a financial banks and non-banking financial regulation 3: services regulator in its home jurisdiction and companies, financial intermediaries, it includes the entity’s holding, subsidiary or investment banks, insurance 2(1)(e) “Global In-House Centre” means a unit associate companies, branch, or subsidiary of a companies, re-insurance companies, set up in the International Financial Services Page 1 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

actuaries, brokerage firms, funds, Centre for providing support services, directly or holding company to which it is also a stock exchanges, clearing houses, indirectly, to entities within its financial services subsidiary.

depositories, and custodians, for group or other financial services entities outside carrying out a financial service in its financial services group, including but not A GIC unit is required to satisfy the eligibility respect of a financial product; limited to banks ……for carrying out a financial criteria wherein it is specified that a GIC unit service in respect of a financial product; can be registered only if it can be set up as a unit to provide support services exclusively to its financial service group.

There are a number of business managed service providers that provide similar support services to third-party service recipients.

However, due to the restrictive definition such service providers shall not be covered in the meaning of GIC. Broadening of the definition of the term Global In-House Centre will result in more such managed service providers being enabled to setup a GIC unit in the IFSC which will translate into higher industry participation in the IFSC.

The latest NASSCOM reports highlight significant developments and trends in India's BPO and BPM industries, particularly within the financial services support sector.

India's BPM industry experienced robust growth, with revenues reaching $44 billion in FY22, marking a double-digit increase of over 14% compared to the previous fiscal year. The country accounts for nearly 40% of global sourcing spend and hosts a high concentration of Global 2000 enterprises using and Page 2 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

evaluating India as a delivery location for BPM services. The sector continues to evolve, with a strong focus on digital transformation, leveraging technology and data capabilities, and transitioning from transactional relationships to strategic business partnerships.

The shift towards BPM 4.0 emphasizes a more dynamic, reliable, and agile approach to meeting client needs, integrating advanced technologies, design thinking, and a differentiated workforce model. This evolution is driven by the need for resilience, agility, and superior stakeholder experiences, highlighting the importance of digital capabilities and domain-centric expertise.

Highlights of managed services in India, • Revenue in the Managed Services market is projected to reach US$390.60m in 2024. • Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 7.75%, resulting in a market volume of US$567.20m by 2029.

• The average Spend per Employee in the Managed Services market is projected to reach US$0.72 in 2024. • In global comparison, most revenue will be generated in the United States (US$10,260.0m in 2024).

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Thus, by allowing managed service providers to offer support services to third-party financial entities for financial services / products, a level playing field is created alongside global in- house centers.

3 2. Definitions 2 (1)(e) and 3(1)(ii) Without prejudice to (1), to broaden the range of 1. Currently, a GIC unit can provide support services offered by GIC units to include support services, directly or indirectly, to entities within services for financial institutions, without the financial services group, such as banks and limiting it to support services for the purpose of non-banking financial companies. However, "carrying out financial services in relation to a this support is restricted to financial services financial product." related to financial products as defined under sub-clauses (e) and (d) of section 3 of The Therefore, the following modifications as International Financial Services Centres indicated in amber should be made in sub- Authority Act, 2019 (“The IFSCA Act”).

regulation 1(e) of Regulation 2 and sub- regulation (1)(ii) of regulation 3: 2. A GIC unit is eligible for registration only if 2(1)(e) “Global In-House Centre” means a unit it meets the criterion of providing support set up in the International Financial Services services for carrying out a financial service in Centre for providing support services, directly or relation to a financial product.

indirectly, to entities within its financial services group, including but not limited to banks ……for 3. Financial Services GCCs play a crucial role carrying out a financial service in respect of a in key organizational functions such as risk financial product or any other services; advisory and management, comprehensive capital analysis and review, risk data 3(1) An applicant desirous of being registered as aggregation and reporting, and ensuring a Global In-House Centre shall be required to regulatory compliance. They also provide

meet the following eligibility criteria: centralized capabilities like IT, accounts, legal,

(i)…………; and secretarial compliance, taxation, internal audit,

(ii) The support services provided to its financial HR, and analytics, which are not necessarily services group should be for the purpose of linked to carrying out financial services in carrying out a financial service in respect of a relation to a financial product.

financial product or any other services;

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Alternatively, sub-regulation (4) should be 4. While, some of these activities are included inserted in Regulation 4 as under: in the IFSCA (Bookkeeping, Accounting,

(4) Without any requirement of any certificate of Taxation, and Financial Crime Services) registration, an entity registered under GIC Regulations 2024 and the Ancillary Services regulation may be permitted to act as – framework, they still require GICs to additionally have a BATF or an Ancillary A. “BATF Service Provider” as defined in clause Service Provider license. For instance, if an

(h) of sub-regulation (1) of Regulation (3) of investment banking firm based in USA sets up IFSCA (Book-keeping, Accounting, Taxation a GIC in the IFSC, the GIC can provide and Financial Crime Compliance Services) services such as custodial services, credit Regulations, 2024 and, profiling services, etc. which directly enable the investment bank overseas to service its B. “Ancillary Service Provider” as defined in customers. However, the investment banking clause (c) of sub-regulation (1) of Regulation (3) group’s own accounting, legal, secretarial work of IFSCA (Book-keeping, Accounting, Taxation can be done by the GIC only with a separate and Financial Crime Compliance Services) BATF or Ancillary Service License. This Regulations, 2024. creates the need for GICs to hold multiple licenses.

Therefore, there is a need to broaden the range of services that GIC units in the IFSC can provide, allowing various support services under a single registration and including services that are not currently covered.

4 2 Definition of GIC may be expanded to financial The rationale is at present there is huge market division of MNC for financial data, pricing, cost potential be explored. More precise exercise analysis and budget performance data analysis can be done for Retail, FMCG, telecom, pharma aviation industries finance division 5 2 (c) To clarify inclusion of regulated fintech Current definition may exclude innovative companies firms regulated by the financial services regulator and contributing to group entities belonging to financial services Page 5 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

6 Expansion of GIC set up to non- GIC Regulations should be amended (in line a) Under the existing (GIC Regulations), an financial services groups with the BATF Regulations) allowing groups entity proposing to register as a GIC should which are not in financial services to set up GICs exclusively cater to its financial services group to render services to other non-resident group and the support services should be for the entities. Therefore, the restriction that only FS purpose of carrying out a financial service in groups can set up a GIC may be relaxed, as has respect of a financial product.

been done in the context of BATF services. b) Therefore, as per the extant regulations, a This will also give a boost to overall GIC in IFSC can be set up by a financial development of the ecosystem in IFSC. services group to cater to non-resident (outside India) group entities.

c) Recently, IFSCA has come out with International Financial Services Centres Authority (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024 (‘BATF Regulations’) wherein an Ancillary Service Provider can provide BATF services to all non- resident clients (even-though they may not be into financial services business). Further, any non-resident (not necessarily being in FS) can set up a GIC to provide BATF services to its group companies outside India.

d) Typically, a GIC may provide a wide array of services over and above BATF services to its group companies. GICs also help in developing the ecosystem and attract young talent. Therefore, in the interest of growing IFSC, groups outside of FS may be allowed to set up a GIC.

7 2 (1)(c) The regulation should include following; 1. Permitting regulated NBFCs of non- Financial Services group entities shall widen

1) any entity having one of the group entity the scope of the regulation and shall enable incorporated as Non-Banking Financing such large global enterprises to set up Global Page 6 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

Company (NBFC) which provides financing Capability Centres in GIFT IFSC. This shall support to customers of parent entity or other not only generate employment opportunities on group entities engaged in manufacturing and large scale in GIFT IFSC but shall also attract selling capital intensive products or equipment required talent to encourage other FS and Non- (e.g. large auto sector companies such as FS GCCs to explore GIFT IFSC to make its Mercedes Benz, BMW etc. have NBFC entities global operational base.

as part of their group entities to finance its customers). Such NBFCs are generally regulated in home jurisdictions. Thus, such NBFCs should 2. Since foreign universities, law firms, aircraft be permitted to set up presence in GIFT IFSC to leasing, and ship leasing entities are already undertaken back office operations for entire covered as financial products, the back office group (i.e. all group entities) function / operations of such sectors should be allowed to set up GICs in GIFT IFSC.

2) any entity engaged in imparting education and duly regulated by the competent body / authority in its home jurisdiction 3. There are several FS intermediary business that are not regulated by many countries such

3) any entity engaged in aircraft , shipping or any as law firms, insurance brokers, etc. Captives machine / equipment related to aircraft or ship of such business should also be allowed. duly registered by the competent body / authority in its home jurisdiction

4) Foreign law firms should also be allowed to open captive centres in IFSC.

8 2 2 (1) (c) Definition of Financial services group – Clarity on whether a manufacturing group “financial services group” shall mean any entity which has one financial services entity is a which is regulated by a financial services financial services group. So can the GIC in regulator or any other competent body regulating IFSC provide support services to all entities in financial services activities in its home the group or only to the regulated financial jurisdiction and include its holding, subsidiary or services entity.

associate companies, branch, or subsidiary of a holding company to which it is also a subsidiary.

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Provided that in case of any doubt as to whether the group constitutes a “financial services group” or any entity within the group qualifies as such, an application may be made to the Authority for determination, whose decision shall be final.

9 2 2 (1) (e) Definition of GIC:“Global In-House Centre” This definition is restrictive definition as it means a unit set up in the International Financial restricts providing support services to entities Services Centre for providing support services, within financial services group including to FSI directly or indirectly, to entities within its entities for carrying out financial services in financial services group, including but not respect of a financial product.

limited to banks and non-banking financial companies, financial intermediaries, investment banks, insurance companies, re-insurance companies, actuaries, brokerage firms, funds, stock exchanges, clearing houses, depositories, and custodians, for carrying out a financial service in respect of a financial product;

10 Definition of “Global In-House Centre” is There are several functions that a GIC can defined to mean a unit set up in IFSC to provide support its group entities with. These could also ‘support services’ directly or indirectly, to include Bookkeeping, Financial Statements entities within its ‘Financial Services Group’ for preparation, Invoicing and coordinating in carrying out a ‘financial service’ in respect of a payment of Bills, Periodic regulatory filings, ‘financial product’. compliances, Administration of meetings, Tax It is our recommendation support services, Data capture and reporting, that the expressions ‘for carrying out a ‘financial and such other services as may be required service’ in respect of a from time to time.

‘financial product’ A GIC could be set up to provide ‘support services’ to eligible entities (entities that qualify as being part of ‘Financial Services Group’ and are located in FATF compliant jurisdictions) that carry out the above activities.

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While the expressions ‘financial service’ and ‘financial product’ are defined under the IFSCA Act, If the GIC is set Businesses can proceed confidently, knowing that their applications will be approved unless there are valid objections.

Regulators receive numerous applications.

Deemed approval helps manage the workload efficiently. It allows regulators to focus on exceptional cases or those requiring closer scrutiny. Clear timelines and automatic approval promote transparency. Applicants receive equal treatment, and regulators must provide specific objections if they choose to reject an application.

11 2 (1)(e) Without prejudice to (1), to broaden the range of 1. Currently, a GIC unit can provide support and services offered by GIC units to include support services, directly or indirectly, to entities within 3(1)(ii) services for financial institutions, without the financial services group, such as banks and limiting it to support services for the purpose of non-banking financial companies. However, "carrying out financial services in relation to a this support is restricted to financial services financial product." related to financial products as defined under sub-clauses (e) and (d) of section 3 of The Therefore, the following modifications as International Financial Services Centres indicated in amber should be made in sub- Authority Act, 2019 (“The IFSCA Act”).

regulation 1(e) of Regulation 2 and sub- regulation (1)(ii) of regulation 3: 2. A GIC unit is eligible for registration only if 2(1)(e) “Global In-House Centre” means a unit it meets the criterion of providing support set up in the International Financial Services services for carrying out a financial service in Centre for providing support services, directly or relation to a financial product.

indirectly, to entities within its financial services group, including but not limited to banks ……for 3. Financial Services GCCs play a crucial role Page 9 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

carrying out a financial service in respect of a in key organizational functions such as risk financial product or any other services; advisory and management, comprehensive capital analysis and review, risk data 3(1) An applicant desirous of being registered as aggregation and reporting, and ensuring a Global In-House Centre shall be required to regulatory compliance. They also provide

meet the following eligibility criteria: centralized capabilities like IT, accounts, legal,

(i)…………; and secretarial compliance, taxation, internal audit,

(ii) The support services provided to its financial HR, and analytics, which are not necessarily services group should be for the purpose of linked to carrying out financial services in carrying out a financial service in respect of a relation to a financial product.

financial product or any other services;

4. While, some of these activities are included Alternatively, sub-regulation (4) should be in the IFSCA (Bookkeeping, Accounting, inserted in Regulation 4 as under: Taxation, and Financial Crime Services)

(4) Without any requirement of any certificate of Regulations 2024 and the Ancillary Services registration, an entity registered under GIC framework, they still require GICs to regulation may be permitted to act as - additionally have a BATF or an Ancillary A. “BATF Service Provider” as defined in clause Service Provider license. For instance, if an

(h) of sub-regulation (1) of Regulation (3) of investment banking firm based in USA sets up IFSCA (Book-keeping, Accounting, Taxation a GIC in the IFSC, the GIC can provide and Financial Crime Compliance Services) services such as custodial services, credit Regulations, 2024 and, profiling services, etc. which directly enable B. “Ancillary Service Provider” as defined in the investment bank overseas to service its clause (c) of sub-regulation (1) of Regulation (3) customers.

of IFSCA (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) However, the investment banking group’s own Regulations, 2024. accounting, legal, secretarial work can be done by the GIC only with a separate BATF or Ancillary Service License. This creates the need for GICs to hold multiple licenses.

Therefore, there is a need to broaden the range of services that GIC units in the IFSC can provide, allowing various support services Page 10 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

under a single registration and including services that are not currently covered.

12 3. Eligibility 3. (1) An applicant desirous of being 3(1) An applicant desirous of being registered as criteria registered as a Global In-House a Global In-House Centre shall be required to

Centre shall be required to meet the meet the following eligibility criteria:

following eligibility criteria: (i) It shall exclusively cater to its financial

(i) It shall exclusively cater to its services group or other financial services entities financial services group wherein the outside its financial services group wherein the entities served must be located in entities served must be located in Financial Financial Action Task Force Action Task Force compliant jurisdictions; and compliant jurisdictions; and (ii) The support services provided to its financial

(ii) The support services provided to services group or other financial services entities its financial services group should be outside its financial services group should be for for the purpose of carrying out a the purpose of carrying out a financial service in financial service in respect of a respect of a financial product;

financial product 13 (1)(i) Suggestion: IFSCA could consider relaxing the Expanding the scope of service recipients of a requirement of entities being served “only” to GIC in GIFT IFSC could serve as a strategic FATF countries i.e. to also include entities step that may potentially unlock many served in Non-FATF countries. opportunities and drive regional economic growth.

14 GIC Regulations should be amended (in line Under the existing (GIC Regulations), an entity with the BATF Regulations) allowing groups proposing to register as a GIC should which are not in financial services to set up GICs exclusively cater to its financial services group to render services to other non-resident group and; the support services should be for the entities. Therefore, the restriction that only FS purpose of carrying out a financial service in groups can set up a GIC may be relaxed, as has respect of a financial product.

been done in the context of BATF services. Therefore, as per the extant regulations, a GIC in IFSC can be set up by a financial services This will also give a boost to overall group to cater to non-resident (outside India) development of the ecosystem in IFSC. group entities .

Recently, IFSCA has come out with Page 11 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

International Financial Services Centres Authority (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024 (‘BATF Regulations’) wherein an Ancillary Service Provider can provide BATF services to all non- resident clients (even-though they may not be into financial services business). Further, any non-resident (not necessarily being in FS) can set up a GIC to provide BATF services to its group companies outside India.

Typically, a GIC may provide a wide array of services over and above, BATF services to its group companies. GICs also help in developing the eco system and attract young talent. Therefore, in the interest of growing IFSC, groups outside of FS may be allowed to set up a GIC.

15 NA IFSCA could add a sub-regulation (2) allowing • By expanding the scope of services which are GICs to provide financial services not only to permissible by GICs in GIFT IFSC, GICs have their financial services group entities but also to the potential to become more attractive to a other non-related client entities of overseas head wider range of companies, which in turn would office operating in financial services sector. likely result in increased interest and investment in GIFT IFSC.

• It could also help in the development of requisite skill sets and human resources which could potentially be transferable to financial service industries and create a more vibrant and thriving economic environment.

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16 3(1)(ii) The GIC Regulations do not define the term Given that most regulations in IFSC are light ‘support services’, which provides flexibility in touch and drafted with the intent of providing the interpretation of the same. ‘ease of doing business’ to the stakeholders, our understanding of what qualifies as ‘support services’ will depend on the nature of the GIC’s operations, considering different entities in the financial services sector require different kinds of support services.

17 3(1)(ii) Should be expanded to include not just back Especially for entities like ours were lot of office operations but also front office operations work happens at the front end including like executing transactions on behalf of clients as execution of trades on behalf of clients.

per their instructions 18 B. Permissibility of services While we understand that the purpose of IFSC is a) Under the existing GIC Regulations, an rendered by GIC to resident group to bring onshore the activities which were being entity proposing to register as a GIC should entities carried out offshore, it is our humble suggestion/ exclusively cater to its financial services group recommendation that a carve out may be made wherein the entities served must be located in under the GIC Regulations to allow the GIC to FATF compliant jurisdictions and the support render services to its Indian group entities where services provided to its financial services group such Indian companies form part of a larger should be for the purpose of carrying out a global group; and the GIC will be rendering financial service in respect of a financial services to the entire group and services rendered product.

to Indian group companies will constitute a part of the service rendered to the global group. b) Further, a GIC fulfilling the above Where deemed fit, a threshold may be provided conditions should provide services to non- to ensure that the GIC does not render majority resident entities only.

of its services to the Indian group companies. c) As per the above provisions, a financial services group having global presence (including in India) and proposing to set up a GIC in IFSC will be able to render financial services in respect of financial products only to its non-resident group companies. In view of the above, such GIC set up in IFSC will not be Page 13 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

able to cater to its group entities which are situated in India. d) Since a GIC is generally set up to provide support services to its entire group (within India and outside India), restricting the permissibility of GIC set up in IFSC to render services only to non-resident entities will act as a deal breaker in many cases for GICs to establish their presence in IFSC since excluding the Indian entities from receiving the services offered by its GIC company may not be feasible/ commercially viable for the business.

19 3 3(1)(i) Permit services to subsidiaries/branches in Current rule protects integrity, but some global jurisdictions actively on FATF “grey” lists, groups operate in jurisdictions under subject to enhanced AML/CFT controls and prior monitoring (not blacklisted). A conditional approval. route widens GIC addressable market without diluting safeguards.

20 3 3(1)(ii) Clarify that data science, AI/ML model ops, Removes doubt for tech-heavy groups where cybersecurity ops, RegTech, ESG reporting, the link to “financial product” is indirect (e.g., cloud SRE for group entities qualify as support model validation, threat intel). Predictability services. Add an illustrative schedule. will speed registrations.

21 3 3(1)(i) 3.(1) An applicant desirous of being registered as Further as GIC itself is notified as financial a Global In-House Centre shall be required to services, so GIC should be allowed to provide

meet the following eligibility criteria:(i)It shall services to non-financial services groups or exclusively cater to its financial services group entities also. wherein the entities served must be located in Financial Action Task Force compliant jurisdictions; and(ii)---------- 22 3 3(1)(ii) 3.(1) An applicant desirous of being registered as Support services has not been defined a Global In-House Centre shall be required to

meet the following eligibility criteria: It appears that the support services are with Page 14 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

(i)--------- and respect to financial products, and not all

(ii)The support services provided to its financial support services are covered. What about services group should be for the purpose of internal audit services, accounting services, carrying out a financial service in respect of a cyber services, tax services, administrative financial product services, etc., are these covered as GIC.

23 Expand the scope of service providers GIC is required to be part of the financial services group. Third party GIC should be allowed to provide services to other financial services group or any other groups or entities.

Technology Companies provide Third Party GCC service delivery model to financial services group. They should be allowed to set- up units in IFSC e.g. TCS, Infosys, Wipro, Zenzar etc. Third Party Entity providing managed services, BOT, etc. to financial services group be allowed as this is an evolving model of GCC.

Entities that provide financial services in relation to financial products could be incorporated in India as service company but not regulated in India. They also should be covered. For example, company set-up in India for punching trade transactions on the stock exchanges outside India are service companies and are not regulated. Such companies should also be covered as GIC 24 4 4(1)&(3) Introduce a single-window e-application with Reduces uncertainty and aligns with ease of track status, standard TAT (e.g., 30 days), and doing business.

deemed approval for non-complex cases if no Deemed timelines are now common in leading query in TAT. IFCs.

25 4 Registration A unit registered as GIC should not require separate registration as BATF and under Page 15 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No. ancillary and TechFin regulations if it provides such services. This should be specifically

provided in this regulations 26 5 5(1)&(2) Publish standard conditions & model rejection Transparency cuts iteration time and improves reasons; allow pre-application conferences. application quality; pre-filings reduce rejection risk.

27 A timeline / expected period for receiving All objective parameters have been laid out approval should be provided. under the GIC Regulations - (definition of a “Global In-House Centre”, ‘support services’, entities that qualify as being part of ‘Financial Services Group’, the entities served must be located in FATF compliant jurisdictions, and that the support services provided to its financial services group should be for the purpose of carrying out a financial service in respect of a financial product. The above provisions cover all the relevant frameworks within which a GIC is expected to operate.

Deemed approval ensures timely decision- making. By setting a specific timeframe (e.g., ‘x’ days), regulators encourage prompt responses. Businesses can proceed confidently, knowing that their applications will be approved unless there are valid objections.

Regulators receive numerous applications.

Deemed approval helps manage the workload efficiently. It allows regulators to focus on exceptional cases or those requiring closer scrutiny. Clear timelines and automatic approval promote transparency. Applicants receive equal treatment, and regulators must provide specific Page 16 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

28 While we understand that the purpose of IFSC is a) Under the existing International Financial to bring onshore the activities which were being Services Centres Authority (Global In-House carried out offshore, it is our humble suggestion/ Centres) Regulations, 2020 (GIC Regulations), recommendation that a carve out may be made an entity proposing to register as a GIC should under the GIC Regulations to allow the GIC to exclusively cater to its financial services group render services to its Indian group entities where wherein the entities served must be located in such Indian companies form part of a larger Financial Action Task Force compliant global group; and the GIC will be rendering jurisdictions and the support services provided services to the entire group and services rendered to its financial services group should be for the to Indian group companies will constitute a part purpose of carrying out a financial service in of the service rendered to the global group. respect of a financial product.

Where deemed fit, a threshold may be provided to ensure that the GIC does not render majority of its services to the Indian group companies. b) Further, a GIC fulfilling the above conditions should provide services to non- resident entities only.

c) As per the above provisions, a financial services group having global presence (including in India) and proposing to set up a GIC in IFSC will be able to render financial services in respect of financial products only to its non-resident group companies. In view of the above, such GIC set up in IFSC will not be able to cater to its group entities which are situated in India.

d) Since a GIC is generally set up to provide support services to its entire group (within India and outside India), restricting the permissibility of GIC set up in IFSC to render services only to non-resident entities will act as a deal breaker in many cases for GICs to Page 17 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

establish their presence in IFSC since excluding the Indian entities from receiving the services offered by its GIC company may not be feasible/ commercially viable for the business.

29 While we understand that the purpose of IFSC is The present GIC regulations can be broad to bring onshore the activities which were being based to include GCCs as eligible units. carried out offshore, it is our humble suggestion/ recommendation that a carve out may be made This would open avenues for existing GCCs under the GIC Regulations to allow the GIC to who cater to group and third-party customers render services to its Indian group entities where from the same talent pool.

such Indian companies form part of a larger global group; and the GIC will be rendering services to the entire group and services rendered to Indian group companies will constitute a part of the service rendered to the global group.

Where deemed fit, a threshold may be provided to ensure that the GIC does not render majority of its services to the Indian group companies.

It may also be clarified that where the GIC is providing the services to a group, which has largely financial services entities, it may also provide services to other group entities which are not in financial services. This is all centralization of all back-office services through one entity to the entire group.

Amendment in GIC regulations to recognise GCCs serving to third party customers as eligible to operate GIC unit for the permissible activities.

30 6. (1) A Global In-House Centre, Suggestion: IFSCA could consider amending the Allowing GICs to render services to Indian Permissible meeting requirements under regulations to mandate GICs in GIFT IFSC to entities could provide an incentive for higher Page 18 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

services and regulation 3, shall provide services render services “primarily” to non-residents, investments in establishing GICs in GIFT IFSC activities to non-resident thereby permitting GICs in GIFT IFSC to render and help build momentum in popularizing the entities only. services to their Indian group entities, etc. as sector.

well. IFSCA could consider prescribing a certain threshold (say on the basis of any operational parameters i.e. in terms of revenue, expenditure etc.) for services which may be provided to Indian group entities, such that the operations of the GIC in GIFT IFSC is not India focused.

Group entities could be defined similar to the IFSCA (BATF) Regulations, 2024.

31 6. The restriction to provide services only to non- The GIC operating in GIFT IFSC may also resident entities should be relaxed and should serve operations within the group having include ‘Indian group entity’ presence in India. Additionally, the intent of setting up the GIC in GIFT IFSC is to deliver services typically from low-cost jurisdictions.

Thus, to reduce costs and increase efficiency, it is suggested that such territorial restrictions can be removed.

32 6. The condition for providing support services to The present GIC regulation requires 100% of only non residents group entities should be services to be exported to customers located relaxed to include Indian group entity as well. outside India. GICs also service India GIC regulation should allow services to be operations within the group and as such the offered to Indian group entity with a cap of 10% current guidelines should permit services to be of total revenue offered even to group entities in India with a cap of 20% of total revenue 33 6. Local Services – the present GIC Regulations The present requirement of 100% of services to requires 100% of services to be exported to be exported to customers located outside India customers located outside India, GICs Also dissuades certain large global FS groups from service India Operations with in the group and as setting up GIC in GIFT IFSC since they may such the current guidelines should be permitted support operations within India which would be to be offered even to group entities in India. required to be serviced as well. A GIC set up in Page 19 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

any SEZ or STPI zones across the country are

Suggested Changes: able to service both international group entities GIC regulation should allow services to be as well as domestic operations and the offered to any group entity (including in India) – regulations do not prescribe any such a cap of 25% may be suggested so that the main restriction. STPI permits providing services to objective should continue to be outbound DTA upto 50% of the total export turnover, business. whereas SEZ legislation has not prescribed any such limit for DTA services.

Proposed Amendment to Para 6(1) of the GIC

Regulations: Permitting local services with a certain limit is definitely a welcome step. In practical sense, a slightly higher limit only provides a comfortable proposition to any incumbent GIC who may be undertaking a feasibility study. In our experience the actual local services may be well below the 10% limit. Given this, your kind office may examine introducing a limit of 25% of the total export turnover which should provide the much needed flexibility for managing operations at GIFT IFSC vis-à-vis other GCCs in India. Practically, not every GIC unit would operate at the enhanced limit, however expansion of large GIC set-ups may be driven by such enhanced limit.

34 6. (2) Relocation of employees from an Suggestion: IFSCA could consider: • A staggered approach to relocation, coupled existing entity in the domestic area a) Allowing for a staggered decrease in the with the inclusion of both supervisory and in India shall be permissible with number of employees relocated, starting with a junior employees, would enable a faster set-up respect to supervisory personnel higher percentage (say approx. 50%) of especially for larger GCC set ups, ensuring a only, which may be allowed with supervisory personnel relocated while setting-up smooth transition and sustainable talent prior approval of the Authority up to in the initial years, and gradually reducing to pipeline.

a maximum of twenty percent of the 20% say over a period of 10 years. strength in such category. • It would also allow requisite time for local b) Additionally, IFSCA could also allow talent development and training, fostering a Page 20 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

relocation of certain proportion / junior robust and dynamic workforce. employees category (say approx. 50%) to address initial talent gaps and ensure a smooth • As per IFSCA (BATF) Regulations, 2024, transition/ commencement of operations. relocation of employees from Indian group entities is permitted upto 20% of the total c) Further, to address potential ambiguities in the employee strength of the BATF service interpretation of the regulations, "Personnel in provider (in GIFT IFSC). Similar exception that category" could be defined to specify the could be included in the GIC Regulations.

level/ categories of employees that could fall within the said criteria (say in terms of professional experience in number of years, band/ level in an organization).

35 6. Permit relocation of any employees based on the Section 10A of the Income Tax Act, 1961 deals necessity to establish the GIC unit, rather than with the special provisions for newly limiting it to supervisory personnel only. established undertakings in free trade zones, while Section 10AA pertains to similar provisions for units in Special Economic Zones

(SEZs). One of the requirements to be eligible for the deduction under these sections, is that an undertaking should not be formed by splitting up or reconstruction of an existing business,

Circular No. 12/2014 and Circular No.

14/2014: • Initially, the Central Board of Direct Taxes

(CBDT) clarified that the mere transfer or re- deployment of existing technical manpower from an existing unit to a new SEZ unit would not be considered as splitting up or reconstruction, provided the transferred manpower did not exceed 20% of the total technical manpower in the new unit during the Page 21 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

first year of commencement of business. The objective is to support the competitiveness of the Indian software industry while ensuring compliance with the provisions of the Income Tax Act regarding new units and undertakings.

• This limit was later increased to 50% to enhance the global competitiveness of the Indian software industry by allowing a greater transfer of experienced and skilled manpower to new SEZ units. Alternatively, if the net addition of new technical manpower in all units of the assessee is at least equal to 50% of the total technical manpower of the new SEZ unit during the previous year, the deduction under

section 10A/10AA would not be denied.

The talent pool for Global In-House Centers

(GICs) in GIFT IFSC (Gujarat International Finance Tec-City International Financial Services Centre) face several challenges:

1. There may be a mismatch between the skills that are in demand by GICs and those available in the local talent pool.

2. There might be a need for extensive training programs to upskill the existing workforce to meet the specific needs of GICs, which can be a time-consuming and costly process.

3. Finding talent that fits the specific cultural and operational requirements of GICs can be challenging, especially if the talent pool is diverse and not accustomed to the unique environment of the GIC.

Page 22 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

Therefore, based on the reasoning provided by the CBDT for allowing the transfer of up to 50% of the technical staff in SEZ/STPI units, the regulations concerning the relocation of employees from India to the IFSC should be relaxed. Employees up to 50% of the workforce in IFSC units should be allowed to be relocated 36 6. Relocation of employees from an existing entity The CBDT circular 14/2014 dated 08 October in the domestic The CBDT area in India shall be 2014 increased the limit for transfer of permissible, which may be allowed with prior technical manpower from 20% to 50% approval of the Authority up to a maximum of irrespective of designation/employee role & twenty be allowed with prior percent of the responsibilities for allowing the exemption strength for technical manpower of such to a under Section 10A/10AA of the IT Act. The maximum of domestic unit said relaxation is allowed for the transfer of

Provided that in case relocation of employees employees from SEZ units. from an existing entity in the SEZ and STPI units in India shall be permissible, which may be allowed with prior approval of the Authority up Thus, similar relaxation should be allowed to a maximum of fifty percent of the strength for under GIC regulations as well. Further, transfer technical manpower of such SEZ and STPI unit of technical manpower upto 20% from parent entity should be permitted irrespective of the designation / employee role & responsibilities.

Alternatively, this condition of 20% cap should be monitored over a period of say 5 years.

Since in the initial few years, relocation may be higher and in subsequent years once the operations are settled, then new hire can be more.

37 6. A Limit of 20% may be increased It is the service sector up to 50% to boost the segment will make the jurisdiction more live Page 23 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

38 6. The thresholds may be aligned between all the Bringing in a consistency between IFSCA regulations – Income tax permits transfer of regulations and Income tax would provide employees upto 50% clarity and certainty in operations. Secondly, bringing in supervisory or technical personnel upto 50% may still help IFSCA to achieve its objective of generating significant new employment at non-supervisory levels.

Proposed amendment to para 6 (2) of the GIC Regulations 6(2) Relocation of employees from an existing entity in the domestic area in India shall be permissible with respect to supervisory or technical personnel only, which may be allowed with prior approval of the Authority up to a maximum of fifty percent of the strength in such category.

Further, transfer of employees to the payroll of the IFSC unit from another SEZ location is permitted.

39 6. Ease of formation Removal of the conditions imposed on relocation of establishments to GIFT city (such as only 20% of supervisory staff permitted to be transferred and subject to IFSCA approval). Established GICs will need to leverage on existing workforce and operations teams in order to set up operations initially – restrictions on transferring/relying on existing staff could deter smooth set up of operations.

• Sustaining low operation costs o Availability of co-working spaces that will Page 24 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No. allow GICs to set up on a small scale and expand on need basis rather than invest significant capital in setting up new office space 40 Senior / Supervisory roles for site setup: For long-term success & building culture of a new site, it is important to seed the right senior & experienced talent at the initial stages. GIFT city should allow relaxation in the “20% supervisory” roles restriction while new units build out their presence.

4. Hybrid Operating Model: Almost all GCCs and their global parent organizations offer Work from Home flexibility to the employees for a part (2-3 days) of the week. GIFT city should consider this relaxation (in line with the other SEZs) for the GCCs being setup.

Operating model: Allow GCCs already operating in other sites in India to leverage their existing legal entity and SEZ setup as well as their current ecosystem of technology infrastructure, ISP / network connectivity for setting up a GCC unit at GIFT City.

41 6 2 Revisit the 20% cap on relocation of supervisory This is expected to Provide operational personnel from domestic units. flexibility, business continuity in a new jurisdiction for the organization intending to The 20% cap shall be increased to one-third and setup GIC.

should encompass all employees (including supervisory personnel/KMPs) of the entity.

42 6 6(1) Allow incidental services to resident HQ/CoE in Many global groups centralise oversight in India where needed for group governance, India HQ; a limited carve-out avoids Page 25 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

capped (e.g., ≤10% of billable hours) with ring- duplication while preserving IFSC’s external fenced INR billing. focus.

43 6 6(2) Replace fixed cap with risk-based ranges (e.g., Fixed caps can constrain 20–40% based on function criticality) and shift ramps/transformations; risk-tiering + reporting to post-facto intimation for routine moves; keep maintains oversight without slowing scale-up.

prior approval for material transfers.

44 6 2 The restriction of no. of employees / staff being The flexibility of internal rejig as long as these transferred from India is to be restricted 20% employees are transferred for a prolonged may be removed. period of time ought to be allowed. The company concerned should based on the The need to seek approval of the authority may requirements arising from time to time be be triggered only after a given limit, say 50% is allowed to depute or reallocate staff in GIFT.

surpassed. Further seeking approval from the Authority prior to such rejig may be dispensed with as this will only create unnecessary bottleneck and in times of exigency make the concerned company officials cheat the system. The idea should be to be get maximum members into the GIFT fold to handle the affairs of the company.

45 6 1 Broadening the scope of 'permissible services Presently, the regulations permit the GIC to and activities' by permitting GIC to provide provide services to non-resident entities only. services to resident entities of the financial This has restricted the domestic financial services group. services group (with dominant presence within India rather than overseas) to set-up GIC within the IFSC. Enabling GICs to provide services to resident entities of the financial services group may attract large domestic FS groups to leverage on IFSC framework for set-up of GICs. So as to acheive the objectives of IFSC framework, IFSCA may consider prescribing a threshold limit for provision of services to resident entities.

Page 26 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

46 6 2 Rationalising the limit for relocation of The CBDT circular 14/2014 dated 08 October employees to GIC from domestic area in India. 2014 increased the limit for transfer of technical manpower from 20% to 50% irrespective of designation / employee role & responsibilities for allowing the exemption under Section 10A/10AA of the IT Act. The said relaxation is allowed for the transfer of employees from SEZ units.

Thus, similar relxation should be allowed under GIC regulations as well. Further, transfer of technical manpower upto 20% from domestic unit should be permitted irrespective of the designation / employee role & responsibilities.

Alternatively, this condition of 20% cap should be monitored over a period of 5 years. Since in the initial few years, relocation may be higher and in subsequent years once the operations are settled, then new hire can be more.

47 6 6.1 A Global In-House Centre, meeting requirements The Global in-house centre should be allowed under regulation 3, shall provide services to non- to provide services to entities in SEZ in India resident entities only and also to other GIC in India or jointly alongwith the groups’ GIC in India 48 6 6.2 Relocation of employees from an existing The requirement that the employees transferred entity in the domestic area in India shall be should be in supervisory grade should be permissible with respect to supervisory dispensed with.

personnel only, which may be allowed with Therefore, based on the reasoning provided by prior approval of the Authority up to a the CBDT the relocation of employees from maximum of fifty twenty percent of the strength India to the IFSC should be relaxed. Employees in such category up to 50% of the workforce in IFSC units should be allowed to be relocated Page 27 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

Earlier also transfer of employees were permitted – kindly refer to the CBDT circular.

Circular No. 12/2014 and Circular No.

14/2014: • Initially, the Central Board of Direct Taxes

(CBDT) clarified that the mere transfer or re- deployment of existing technical manpower from an existing unit to a new SEZ unit would not be considered as splitting up or reconstruction, provided the transferred manpower did not exceed 20% of the total technical manpower in the new unit during the first year of commencement of business. The objective is to support the competitiveness of the Indian software industry while ensuring compliance with the provisions of the Income Tax Act regarding new units and undertakings The talent pool for Global In-House Centers

(GICs) in GIFT IFSC (Gujarat International Finance Tec-City International Financial Services Centre) face several challenges: • This limit was later increased to 50% to enhance the global competitiveness of the Indian software industry by allowing a greater transfer of experienced and skilled manpower to new SEZ units. Alternatively, if the net addition of new technical manpower in all units of the assessee is at least equal to 50% of the total technical manpower of the new SEZ unit Page 28 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

during the previous year, the deduction under

section 10A/10AA would not be denied.

49 6 6.2 Whether the employees in GIC in IFSC can work Employees in SEZ are allowed to work hybrid from home (from home or any other place) till 31 December 2027. Whether the employees in the IFSC GIC can work from home or hybrid working or do they have to be work from offices in IFSC GIFT 50 7. Currency 7. (1) A Global In-House Centre Unlike other IFSC units, GIC may not be Presently, there is a lot of ambiguity around and mode for shall deal in freely convertible required to maintain a SNRR account permissible transactions through a SNRR conducting foreign currency only; account. Secondly, given that GICs are purely business Provided that it may defray its exporters of service, managing a foreign administrative expenses in INR by currency account as well as SNRR account is maintaining an INR account as may becoming complex. While GICs are required to be specified by the Authority substantiate receipt of 100% of proceeds in foreign exchange, banks are furnishing FIRCs/

(2) A Global In-House Centre may payment advices only for transfers made to conduct its business in any mode SNRR. GICs particularly belong to FS groups permitted by the Authority, which may possibly have banking operations in including branch mode India.

Hence, GICs should be permitted to operate foreign currency account with banks in India (not necessarily in IFSC) which belong to their FS group.

51 7 7(1) & 7(2) Explicitly allow multi-currency accounting & Many groups run multi-currency cost centres; multi-entity service centres; clarify that shared explicit permission avoids needless structuring.

services across group entities may be billed in multiple FCYs with consolidated USD reporting.

52 7 2 Retention of 'branch mode' Permitting GICs to operate under a 'branch mode' offers ease of operability and reduces entity compliance burden. This condition should be retained so as to ensure ability of Page 29 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

existing GIC set-ups in GIFT IFSC to continue to operate.

53 8. Reporting (1) A Global In-House Centre shall Any annual reporting to IFSCA to be done Presently the circular / regulations mentions requirements be required to furnish information only any reporting as specified to be done.

relating to its operations to the However, there is no clarity on the same Authority in such manner and form and at such intervals as may be specified by the Authority.

(2) A Global In-House Centre shall submit all reports to the Authority in USD, unless otherwise specified.

54 8. Reporting Annual financial statements of the GIC unit Whether the Annual Financial Statements have requirements to be audited and by when the same needs to be submitted.

55 8. Reporting Confirmation of compliance with the regulations There is no clarity on what documents have to requirements as issued under International Financial Services be submitted and by when.

Centres Authority (Global In-house Centres) Regulations, 2020 - A Global In-House Centre shall be required to furnish information relating to its operations to the Authority in such manner and form and at such intervals as may be specified by the Authority 56 8. Reporting Regulation 8 and Circular dated 18- To define timelines and introduce digital It is expected to reduce ambiguity and manual requirements 11-2020 - Reporting requirements reporting, standardized templates and dashboards efforts, minimize back-and-forth with the for regulatory reporting and timely submission of Regulator and ensure consistency in submission the information. of the regulatory reports, and other information.

57 8. Reporting 8(1)& (2) Move to risk-based reporting cadence (quarterly Reduces compliance cost for low-risk GICs; requirements for higher-risk, semi-annual/annual for low-risk), aligns reports with functional currency to cut and permit reporting currency = functional FX noise.

currency (USD/EUR/GBP) with USD conversion.

Page 30 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

58 8. Reporting 2 Reports to authority may be submitted in USD as Some of these reports may be reviewed or seen requirements ell as in INR. Further the date on which the by the investors or users in India, who would conversion from INR into USD or vice versa be more comfortable with the usage of the needs to be specified to understand the actual inidian currency and the denominations historical cost vi.lakhs, crores, etc. as against the non-Indian who may be more comfortable to see the information in USD with the denominations in millions, billions, etc.

59 Annexure 2 - Requirement to submit annual financial The Circular dated 18 Nov 2020 requires GIC to Circular statements of GIC unit units to submit annual financial statements with dated 18 Nov IFSCA on annual basis. However, on ground, 2020 IFSCA is insisting for submission of audited financial statements for GIC units. The

Circular may be appropriately modified so that the requisite compliance requirement is clarified.

60 Annexure 2 - Requirement to provide confirmations on annual The Circular dated 18 Nov 2020 requires GIC

to Circular basis units to submit the following on annual basis: dated 18 Nov 2020 - List of financial services group entities served by the IFSC GIC during the year - Confirmation of compliance with the regulations as issued under IFSCA (GIC) Regulations 2020 IFSCA may consider seeking the aforesaid information from GIC units at the commencement of operations and put an obligation on GIC unit to intimate IFSCA only upon any change in the said information. This Page 31 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

would effectively reduce the compliance burden.

61 8. Reporting 8(1) Reporting Requirements under Adopt proportionate reporting frequency: entities Reduces compliance burden for smaller requirements Operational Requirements with annual turnover < USD 10 million – once entities, allowing more time for business every six months; entities with annual turnover > development, marketing, and client USD 10 million – quarterly. engagement. Aligns with the “Ease of Doing Business” objective.

62 9 9 Permit dual-ledger (functional FCY + INR Dual books aid tax/stat audit; cloud policies mirror) and cloud-first record-keeping (with reflect modern ops while retaining supervisory approved regions, encryption, and audit trail). access.

63 9 All accounting based information, viz.financials, The companies have to submit the accounts for balance sheet, etc. so submitted need to be both the Indian agencies as well as the non accounted for using GAAP and IAS Indian agencies / investors it is imperative that recommended by ICSI. This should be dual accounting standards be followed. The accompanied by appropriate disclosures disclaimer is required since there could be deviations in reporting the same numbers while using GAAP standards or our IAS standards.

64 10 10 Issue a Master Direction for GICs consolidating A single source of truth improves certainty; all circulars, FAQs, sandboxes, and reliefs; annual update ensures currency with fast tech review annually. change.

65 11 11(1)-(2) Introduce graduated supervisory toolkit (advisory Clear, proportionate enforcement encourages letter → remediation plan → restricted activities early remediation and self-reporting. → suspension), with published principles.

66 NA Clarification on the requirement of Key This is expected to reduce any ambiguity, avoid Managerial Personnel (KMP) and their non-compliance and delays in appointments qualification / experience and ensure seamless business operations 67 NA No threshold of Head count expectations act as barrier to ‘minimum employee accommodate count’ should be applied smaller operational hubs supporting parent while scrutinizing applications under GIC entities Regulations. regionally is a strategic move. GIFT City’s 100% ownership structure, infrastructure, and tax benefits make Page 32 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

it an attractive choice.

68 NA (New) Create a Regulatory Sandbox lane within GIC Lets GICs trial advanced services safely, for AI/ML ops, RegTech, cyber-threat intel anchors GIFT-IFSC as innovation hub. sharing, with time-bound waivers.

69 NA (Cross- cutting) Publish service SLAs (registration, approvals, Raises transparency and investor confidence; clarifications), named case officer, and pre-filing reduces back-and-forth. meetings.

70 NA Global Benchmarking – Ship Recommend that IFSCA-registered ship leasing Promotes IFSC competitiveness by removing Leasing (outside GIC scope but entities be exempt from Section IV of the Coastal unintended restrictions on international relevant to IFSC ecosystem) Shipping Bill, 2025 for international trade. trade. Supports growth in ship leasing

Section IV should apply only to India’s coastal operations in line with shipping (Cabotage trade). IFSC’s global positioning.

71 NA Operational Clarity – SEZ Rules Insert clarification: “For the removal of doubt, it Prevents unnecessary procedural filings for (Rule 29B) is clarified that this Rule shall not apply to Trip short-term charter arrangements, aligning time charters or voyage charters, wherein the regulatory compliance with actual commercial vessel is not acquired or imported as an asset but practice.

is engaged temporarily under a charter party.

Accordingly, such arrangements shall not require filing of Bill of Entry or Shipping Bill under this

Rule.” 72 NA Opportunity for Growth – Encourage and permit “value-added services” Broadening the permissible ancillary services Employment Generation linked to ship leasing (e.g., technical would create direct and indirect employment, management, crewing, commercial develop skill sets, and deepen the maritime operations/commercial management) within services cluster in GIFT-IFSC.

IFSC framework.

73 NA • Availability of a sustainable talent pool is of utmost importance for GICs. This could be met by setting up worldclass educational institutions in proximity to GIFT City. • Creating social and economic infrastructure that would facilitate/attract students from around the country/abroad.

Page 33 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No. • Scholarship programmes to encourage students to move to aforesaid institutions. • Infrastructure required to attract and retain skilled talent / senior talent:

• Economic subsidies/incentives to employees of GIFT city in the form of tax breaks. • Allowing hybrid model of work with flexibility to work from home at least 2-3 days a week, as this has now become the norm for GIC work force.

• Economic and social infrastructure such as affordable housing, local and international transport connectivity, health care, schools, child-care facilities, entertainment such as community centres and clubs in close proximity to GIFT city.

74 NA In order to restore the added advantage which Under the erstwhile dividend taxation regime, was provided to Companies in IFSC and its dividend distribution tax (DDT) was to be paid shareholders, it is hereby humbly requested that by an Indian company on the amount of appropriate amendment be brought in Section 10 dividend so declared / paid by it and of the Act to exempt dividend income in the consequently, such dividend income was hands of shareholder, received from a company, exempt from Income-tax in the hands of the being a unit of IFSC. recipient shareholder.

However, to provide Income-tax advantage / incentives to companies operating in IFSC,

Section 115-O of the Act (the section which required the company to pay DDT on dividend declared / paid) was earlier amended to say that no DDT shall be chargeable in respect of a company, being a unit of IFSC, deriving income solely in convertible foreign exchange, Page 34 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

on any dividend amount declared, distributed or paid, on or after the 1st day of April, 2017.

In view of the above amendment, dividend income in respect of company operating in IFSC was completely exempt from tax as it was not required to pay any DDT and corresponding exemption in the hands of shareholder was always there.

However, with the budget amendment brought in by Finance Act 2020, Section 115-O has been withdrawn i.e. to say that going forward the companies declaring / paying dividend income shall not be required to pay DDT (irrespective of their location i.e. in IFSC or Non-IFSC) and the earlier exemption in the hands of the shareholders has been revoked thereby making dividend income taxable in the hands of the shareholder (irrespective of the fact that dividend income is received from a company operating in IFSC or Non-IFSC).

The above amendment bought in by Finance Act 2020 has unknowingly bought to tax the exemption accorded to dividend income being distributed / paid by companies operating in IFSC as under the Act there is no specific provisions which exempt dividend income in the hands of the shareholder received from a company operating in IFSC.

The benefit of no DDT in the hands of a Page 35 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No. company operating in IFSC was accorded to provide a beneficial advantage to make IFSC as attractive jurisdiction for investment / setting- up a unit to be engaged in financial services.

However, with the aforesaid amendments brought in by the Finance Act 2020, the status of a company operating in IFSC and its shareholders, in terms of taxation of dividend income is now on par with that of a non-IFSC jurisdiction company and its shareholders.

75 NA Under the erstwhile dividend taxation regime, In order to restore the added advantage which dividend distribution tax (DDT) was to be paid was provided to Companies in IFSC and its by an Indian company on the amount of dividend shareholders, it is hereby humbly requested that so declared / paid by it and consequently, such appropriate amendment be brought in Section dividend income was exempt from Income-tax in 10 of the Act to exempt dividend income in the the hands of the recipient shareholder. hands of shareholder, received from a company, being a unit of IFSC, deriving b. However, to provide Income-tax advantage / income solely in convertible foreign exchange.

incentives to companies operating in IFSC,

Section 115 O of the Act (the section which required the company to pay DDT on dividend declared / paid) was earlier amended to say that no DDT shall be chargeable in respect of a company, being a unit of IFSC, deriving income solely in convertible foreign exchange, on any dividend amount declared, distributed or paid, on or after the 1st day of April, 2017.

c. In view of the above amendment, dividend income in respect of company operating in IFSC was completely exempt from tax as it was not required to pay any DDT and corresponding exemption in the hands of shareholder was Page 36 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

always thered. However, with the budget amendment brought in by Finance Act 2020,

Section 115-O has been withdrawn i.e. to say that going forward the companies declaring / paying dividend income shall not be required to pay DDT (irrespective of their location i.e. in IFSC or Non-IFSC) and the earlier exemption in the hands of the shareholders has been revoked thereby making dividend income taxable in the hands of the shareholder (irrespective of the fact that dividend income is received from a company operating in IFSC or Non-IFSC).

e. The above amendment bought in by Finance Act 2020 has unknowingly bought to tax the exemption accorded to dividend income being distributed / paid by companies operating in IFSC as under the Act there is no specific provisions which exempt dividend income in the hands of the shareholder received from a company operating in IFSC.

f. The benefit of no DDT in the hands of a company operating in IFSC was accorded to provide a beneficial advantage to make IFSC as attractive jurisdiction for investment / setting-up a unit to be engaged in financial services.

However, with the aforesaid amendments brought in by the Finance Act 2020, the status of a company operating in IFSC and its shareholders, in terms of taxation of dividend income is now on par with that of a non-IFSC jurisdiction company and its shareholders Page 37 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

76 NA C. Dividend income earned by In order to restore the added advantage which a) Under the erstwhile dividend taxation shareholders from a company being was provided to Companies in IFSC and its regime, dividend distribution tax (DDT) was to a unit set-up in IFSC shareholders, it is hereby humbly requested that be paid by an Indian company on the amount of appropriate amendment be brought in Section 10 dividend so declared / paid by it and of the Act to exempt dividend income in the consequently, such dividend income was hands of shareholder, received from a company, exempt from Income-tax in the hands of the being a unit of IFSC. recipient shareholder.

b) However, to provide Income-tax advantage / incentives to companies operating in IFSC, Section 115 O of the Act (the section which required the company to pay DDT on dividend declared / paid) was earlier amended to say that no DDT shall be chargeable in respect of a company, being a unit of IFSC, deriving income solely in convertible foreign exchange, on any dividend amount declared, distributed or paid, on or after the 1st day of April, 2017.

c) In view of the above amendment, dividend income in respect of company operating in IFSC was completely exempt from tax as it was not required to pay any DDT and corresponding exemption in the hands of shareholder was always there.

d) However, with the budget amendment brought in by Finance Act 2020, Section 115-O has been withdrawn i.e. to say that going forward the companies declaring / paying dividend income shall not be required to pay DDT (irrespective of their location i.e. in IFSC or Non-IFSC) and the earlier exemption in the hands of the shareholders has been revoked thereby making dividend income taxable in the Page 38 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

hands of the shareholder (irrespective of the fact that dividend income is received from a company operating in IFSC or Non-IFSC). e) The above amendment bought in by Finance Act 2020 has unknowingly bought to tax the exemption accorded to dividend income being distributed / paid by companies operating in IFSC as under the Act there is no specific provisions which exempt dividend income in the hands of the shareholder received from a company operating in IFSC.

f) The benefit of no DDT in the hands of a company operating in IFSC was accorded to provide a beneficial advantage to make IFSC as attractive jurisdiction for investment / setting- up a unit to be engaged in financial services.

However, with the aforesaid amendments brought in by the Finance Act 2020, the status of a company operating in IFSC and its shareholders, in terms of taxation of dividend income is now on par with that of a non-IFSC jurisdiction company and its shareholders.

77 NA Opportunity for Growth – Tax Extend existing IFSC tax holiday for ship leasing Encourages long-term investment in high-value Incentives entities from current limit to 25 years, matching assets such as ships, which have an the economic life of shipping assets. operational/economic life of 20–25 years.

Supports capital-intensive industry and enhances IFSC’s global appeal.

78 NA NA Existing law: As per Rule 43A of the Special By allowing WFH for an extended period, new Economic Zone (SEZ) Rules, 2006, any SEZ entities will be able to attract a wider pool of unit may permit its employees to Work from talent, making it easier to hire skilled Home (WFH) until December 31, 2024. employees and manage their workforce efficiently. This flexibility will also help By virtue of Notification dated 28 February 2024 stabilize operations by reducing the need for Page 39 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

issued by the Ministry of Finance (Department of large-scale office space investments upfront, Economic Affairs) of the Government of India, thus managing costs more effectively. the powers assigned to the Development Commissioner under certain sections of the SEZ Act 2005 as regards registration, etc. have been conferred on the Administrator (IFSCA), as nominated by the IFSCA.

Suggestion: IFSCA could consider issuing a

notification/clarification on the applicability of WFH rules in relation to GICs in GIFT IFSC.

In addition, IFSCA could consider requesting the Government of India to modify the necessary

rules to: a) Extend the WFH relaxation for entities registered as GICs in GIFT IFSC, allowing them to continue WFH practices beyond the current deadline of December 31, 2024 (say by 10 years). b) Allow for a staggered decrease in the number of employees WFH, starting with a higher percentage (say approx. 90%) at the time of set up, and gradually reducing to 25% say over a period of 10 years.

79 NA Ease of Doing Business – SEZ WFH policy extends to only IT/ITeS units While SEZ regulations have permitted work and hence may not be applicable to all GIC from home for IT/ITeS units upto 31 December units. As rightly highlighted, IT/ITeS GIC units 2024, IFSCA should introduce work from home have now moved to a hybrid model wherein the policy for GIC units. Flexibility to operate is a employees flexibly avail the option of working major factor for attracting and retaining talent. from office during select days of the week and work from home for the balance time. This Page 40 of 42S. Regulation Sub-Regulation Comments/Suggestion/Feedback Detailed Rationale No. No.

Cumbersome policies may cause failure to attract ensures that employees reside at the base and retain talent location and continue to visit office frequently.

Permitting such hybrid model of working would bring in much need flexibility to other GIC units as well which would in turn help in attracting and retaining talent.

80 NA The regulation should include following 1. Since foreign universities, law firms, aircraft leasing, and Not applicable ship leasing entities

1) any entity engaged in imparting education and are already covered as financial products, the duly regulated by the competent body/authority back office function/ operations of such sectors in its home jurisdiction \ should be allowed to set up GICs in GIFT IFSC

2) any entity engaged in aircraft, shipping or any 2. The entities engaged in providing global machine/ equipment related to aircraft or ship accounting/ consulting and providing services duly registered by the competent body/authority to group entities part of any sector/industry in its home jurisdiction should be allowed to set up a subsidiary company

3) Foreign law firms should also be allowed to open captive centres in IFSC 3. There are several FS intermediary business that are not regulated by many countries such

4) Business process outsourcing firms that as law firms, insurance brokers, etc Captives of provide services to allowed any FS regulated such business should also entities, FS intermediaries (may not be regulated) such as insurance brokers, law firms, etc should also be allowed.

5) any entity engaged in global accounting/consulting and providing services to group entities part of any sector/industry (ie, FS and Non-FS sector both) Page 41 of 42Note: During the public consultation, comments were received from various stakeholders. Modifications, if any, were suitably carried out based on the comments received from the stakeholders and placed before the Authority in the meeting held on December 22, 2025. The comments received from the stakeholders were also placed before the Authority.

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