GIFT City poised to corner over 90% of India's offshore borrowing as economy scales up

GIFT City poised to corner over 90% of India's offshore borrowing as economy scales up​

The International Financial Services Centres Authority (IFSCA) has underscored the transformative role of GIFT City, projecting that the Gujarat-based financial hub could eventually absorb over 90 percent of India’s offshore borrowings. Currently, the share held by GIFT IFSC stands at nearly two-thirds.

K Rajaraman, chairperson of IFSCA, stated that the continued growth and scale-up expected across infrastructure, manufacturing, and technology sectors within India provide substantial headroom for the financial hub. GIFT entities benefit from a combination of competitive financing costs, lower operational expenses, and a robust regulatory ecosystem benchmarked internationally.

The Path to 90 Percent Market Dominance​

IFSCA believes that the trend of increased offshore borrowing channeled through IFSC is set to accelerate significantly. While the eventual market share remains dependent on the preferences of Indian corporations, the structural advantages available at GIFT IFSC make a share exceeding 90 percent a reasonable long-term expectation.

The demand for External Commercial Borrowings (ECBs) will intensify as India solidifies its position as one of the fastest-growing large economies globally. The hub is strategically positioned to facilitate efficient access to global capital, thereby supporting the nation's 'Viksit Bharat' vision.

Policy Certainty Drives Institutional Influx​

A key catalyst behind this market shift has been the recent policy support extended by the finance minister. This included extending income tax exemptions for financial institutions in GIFT IFSC from 10 years to 20 years within a 25-year window, with specific rates applicable beyond that period.

This provision provides vital long-term policy certainty and is expected to attract more banks to establish their operations within the International Financial Services Centre (IFSC). Such an influx will strengthen the local lender base and enhance the availability of ECB financing for Indian businesses.

Banking Sector Reaches Significant Scale Milestones​

Contrary to any fears of a slowdown, the banking sector in GIFT IFSC is actively expanding its footprint rather than scaling down or exiting. Leading foreign lenders are increasingly shifting their offshore lending and treasury activities into their dedicated International Banking Units (IBUs).

For example, MUFG Bank has seen dramatic growth through its IBU, increasing its business from approximately $1.8 billion in 2023 to $12.8 billion by March 2026. Similarly, HSBC expanded its IBU operations from around $3.8 billion in March 2023 to $9.6 billion by March 2026.

The regulatory environment has also proven fertile ground for activity. Following the 2024 amendment to the Banking Regulation Act, banks operating through IBUs have already sanctioned approximately $4.2 billion in acquisition finance within GIFT IFSC.

Key Performance Indicators and Growth Pillars​

Banking assets in GIFT City have now surpassed the $111-billion mark, demonstrating rapid maturation of the financial ecosystem. Trade finance is identified as a primary growth driver, with disbursements increasing from approximately $35 billion in FY24 to around $50 billion in FY26.

IFSCA's long-term ambition is for GIFT IFSC to cater to nearly 20 percent of India’s trade finance requirements, which necessitates scaling annual volumes to roughly $400 billion over time. Furthermore, treasury operations are a significant pillar of growth; ten centres in the IFSC have already raised nearly $5 billion and are projected to reach around 50 within the next three years.

Market Metrics Across Derivatives and Financing​

The derivatives market has demonstrated massive traction, booking approximately $371 billion during FY26 alone. Structured and sustainable finance is also gaining momentum, with ESG-linked financing increasing from roughly $3.4 billion in FY25 to around $6.25 billion in FY26.

In terms of global standing, total registrations granted by IFSCA stood at over 1,200 as of March 2026. Currently, GIFT IFSC IBUs meet 54 percent of India's ECB requirements, having handled $23 billion out of the total $43 billion in ECB flows into India for FY26. The targeted corpus of funds for the hub has been set at $80 billion.