GIFT City's Global Access Provider (GAP) license, originally designed for Indian investors to access international markets, is experiencing a dramatic transformation as half of current license holders now use it exclusively for proprietary trading. According to Pradeep Ramakrishnan, executive director at IFSCA, seven out of 14 GAP license holders are using the license for prop trading, while the remaining seven provide services to Indian clients. This shift represents a fundamental evolution from the framework's original purpose to a tool for managing costs and taxes. Junomoneta International IFSC Pvt. Ltd, K2J Global (IFSC) LLP, and IBISP IFSC Pvt. Ltd are among the GAPs utilizing their licenses for proprietary trading activities.
The regulatory structure offers unprecedented cost advantages for prop firms operating through GIFT City. For client business, IFSCA fees are 0.000075% of quarterly turnover for derivatives and 0.005% for other products, while prop trading maintains the same costs but caps total fees at $10,000 per quarter. As reported by industry executives, a broker with $20 billion quarterly turnover would pay $1 million in fees for client business but only $10,000 for prop trading. The 20-year tax holiday extends to proprietary trading income for resident entities, making GIFT City an attractive base for global market access. INX Global Access recorded $39,025.58 million in total traded value in December, demonstrating the growing volume of prop trading activities.
The GAP license provides brokers with direct access to international markets, bypassing traditional intermediary layers. A GAP can be a subsidiary of a registered stock exchange or a broker registered with IFSCA with direct arrangements with foreign brokers. This structure enables firms to establish direct relationships with international brokers in Taiwan, South Korea, or other markets, avoiding multi-layered routing systems. The framework allows prop firms to spot opportunities in international markets and tie up directly with local brokers rather than waiting for formal exchange linkages. GIFT City's 886-acre smart city location between Ahmedabad and Gandhinagar, regulated by IFSCA since 2020, provides the infrastructure for these global trading operations.
The fintech and payments industry is preparing a comprehensive proposal for regulatory protection amid growing compliance concerns. As reported by Business Standard, the Payments Council of India (PCI) has engaged independent consultants to draft a framework for introducing safe harbour provisions which will be submitted to the Reserve Bank of India (RBI). These provisions would shield compliant licensed entities from liabilities and retrospective regulatory action, with Singapore being studied as a model jurisdiction for legal safeguards. The push comes after the arrest of Fino Payments Bank CEO Rishi Gupta in February over alleged GST evasion linked to real money gaming merchants, highlighting accountability concerns in the digital payments ecosystem. Vishwas Patel, director of Self-Regulated PSO Association (SRPA), emphasized that there must be 'safe harbour for licensed entities which have followed all the norms prescribed by RBI'.
GIFT City has established comprehensive financial infrastructure to compete with established offshore hubs. The facility hosts two world-class international exchanges - NSE IX and India INX with combined daily trading volume exceeding $30.6 billion. Over 200 AIFs are registered, covering private equity, real estate, infrastructure, and structured debt. In a significant development, minimum AIF investment was halved from $150,000 to $75,000 in 2025, expanding accessibility to HNI investors. The EY India Outbound Report noted a 100% surge in Overseas Direct Investment routed through GIFT City in FY2024-25, with the facility now offering products rivalling established offshore hubs from GIFT Nifty futures to global ETFs.
GIFT City's trajectory shows strong momentum with government support and regulatory stability. The government has extended the tax incentive regime to March 2030, providing businesses and investors with five years of regulatory certainty. Employment is projected to grow from 25,000 to 150,000, driving demand for real estate and financial products. For US-based NRIs, caution is advised as many GIFT City mutual funds trigger PFIC rules, while UK-based NRIs must report all foreign income under post-April 2025 rules. However, for NRIs in UAE, Singapore, and most Gulf nations with zero personal tax rates, GIFT City remains effectively tax-free. The trajectory indicates that GIFT City is maturing from a policy experiment into a genuine rival to Singapore and Dubai for South Asian capital.
