The International Financial Services Centres Authority (IFSCA) has released a circular introducing a range of market enThe International Financial Services Centres Authority (IFSCA) has released a circular introducing a range of market enablers designed to strengthen the trade finance ecosystem at GIFT City, India’s International Financial Services Centre (IFSC).
These measures are aimed at positioning GIFT City as a global hub for trade finance, enhancing exporters’ access to capital, deepening factoring and receivables markets, strengthening risk mitigation through insurance, and aligning with global sustainability standards.
Key Measures Announced by IFSCA
1. Trade Finance through IFSC Banking Units (IBUs)
- IBUs have disbursed USD 13.79 billion in trade finance by June 2025.
- Exporters can open foreign currency accounts with overseas banks through IBUs.
- Facilities include trade credit, syndicated lending, risk management tools, and access to global pools of capital.
2. Finance Companies and Receivables Assignment
- IFSCA has issued the Registration of Factors and Assignment of Receivables Regulations, 2024.
- This provides a stronger legal framework for factoring and forfaiting activities.
- Four finance companies are already registered, signalling steady growth in receivables financing.
3. Sustainability Mandate
- All lending institutions in IFSC must allocate 5% of their outstanding loans towards sustainable and green trade finance.
- This aligns India’s trade flows with global ESG priorities and strengthens sustainable supply chains.
4. Capital Raising through Bonds
- Exporters can raise funds by listing foreign currency and masala bonds in GIFT City.
- Non-resident investors benefit from a favourable 9% withholding tax on interest income, making GIFT City a competitive venue for capital raising.
5. Insurance and Risk Mitigation
- IFSC Insurance Offices provide trade credit insurance to protect exporters against:
- Credit risk
- Political risk
- Non-payment and non-acceptance risks
- Re-shipment and re-import risks
- These measures help safeguard exporters, strengthen confidence in cross-border transactions, and provide advisory support for risk management.
6. Global Integration
- IFSCA is in advanced discussions with Factors Chain International (FCI) to integrate IFSC entities into global factoring networks.
- This will expand India’s access to the global trade finance ecosystem.
Impact on Trade Finance
The new framework is expected to:
- Expand exporters’ access to global capital and liquidity.
- Strengthen risk management through insurance-backed protection.
- Provide a clear legal backbone for receivables financing.
- Encourage sustainable trade finance practices.
- Position GIFT City as a globally competitive hub for cross-border trade.
360tf’s Perspective
At 360tf, we see IFSCA’s measures as a transformative step for India’s trade finance sector. By combining regulatory innovation with enhanced access to financing and risk mitigation, exporters and importers will benefit from a more secure, transparent, and cost-efficient ecosystem. These reforms are a crucial step towards supporting India’s vision of achieving USD 2 trillion in annual exports by 2030.
Circular Link: IFSCA’s Market Enablers
