GIFTCITY

PKM Advisory has working experience across the key IFSCA regulatory frameworks, including the IFSCA (Banking) Regulations, IFSCA (Capital Market Intermediaries) Regulations, IFSCA (Fund Management) Regulations covering AIFs and portfolio managers, IFSCA (Global In-House Centre) Regulations, IFSCA (Finance Company) Regulations, ship leasing and the BATF (Banking, Insurance, and Fund Management) and TAS (Treasury and Ancillary Services) frameworks. We also advise IT/ITeS companies and KPO/BPO firms setting up under the GIFT SEZ route. Each engagement starts with an eligibility and structuring assessment before any application work begins.

Yes, IT, ITeS, KPO, and BPO companies can operate from GIFT City through the GIFT SEZ route without needing an IFSCA financial services license. These entities only require a Letter of Approval (LOA) from the Development Commissioner (KASEZ) under the SEZ Act and must comply with standard SEZ export obligations. IFSCA registration or licensing is required only for entities providing regulated financial services such as banking, insurance, fund management, or capital market activities. This distinction is important for technology and services companies looking to benefit from GIFT City’s infrastructure and SEZ tax incentives without the additional regulatory burden of an IFSCA license.

Post-setup compliance for a GIFT IFSC unit operates on two parallel tracks. Under the IFSCA framework, entities must submit periodic regulatory reports, maintain prescribed net worth and capital adequacy, comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations, and adhere to any conditions specified in the license. Under the SEZ Act, units must file monthly SOFTEX/SERF forms, submit an Annual Performance Report (Form I) certified by a Chartered Accountant, maintain export invoice records, and renew the Letter of Approval every five years after the initial one-year period. PKM’s compliance retainer service covers both tracks to ensure no filing is missed.

PKM Advisory combines domain expertise in IFSCA regulatory frameworks with practical, on-ground experience in GIFT City. Our team has advised clients across multiple IFSCA verticals — from proprietary trading firms and fund managers to global in-house Centres and KPO/IT companies — giving us a clear understanding of how different regulatory requirements apply in practice. We are located close to GIFT City and maintain direct working relationships with relevant regulatory and developer offices. Our approach is straightforward: we assess your specific business before recommending a structure, avoid unnecessary complexity in our advice, and stay involved through the entire setup and compliance lifecycle.

Yes, a foreign holding company can incorporate a subsidiary within GIFT IFSC as an IFSC company limited by shares under the Companies Act, 2013. The subsidiary, once set up, is treated as a person resident outside India for FEMA purposes, which gives it significant flexibility to transact in foreign currencies and serve global clients. PKM guides clients through the FDI/ODI structuring and regulatory clearance process as part of the setup engagement, if Indian entity becomes part of subsidiary.

Yes. Getting the IFSCA license or SEZ approval is only the first step — operational readiness involves several additional steps that PKM assists with. These include opening a designated IFSC banking account, filing the LUT with GST authorities before the first export invoice, setting up accounting systems aligned with IFSCA reporting requirements, and advising on permitted foreign exchange transactions under FEMA. We also assist with FEMA filings, inter-company loan structures, and repatriation of funds where relevant. For new promoters or foreign entities unfamiliar with India’s regulatory environment, this post-approval handholding is often as important as the initial application support.

Yes, an Indian company can set up an entity in GIFT IFSC, but the FEMA treatment is what makes this structurally different from a regular domestic subsidiary. Since an IFSC entity is treated as a person resident outside India under FEMA, an Indian company’s investment into its IFSC subsidiary is classified as Overseas Direct Investment (ODI) — not a domestic transaction. This means the Indian parent must comply with ODI regulations under FEMA, which includes obtaining a No Objection Certificate (NOC) from its financial services regulator if it operates in a regulated sector, reporting the investment to RBI, and ensuring the IFSC entity’s activities fall within the permitted scope under ODI rules. Any remittances between the Indian parent and the IFSC entity must also be routed through proper banking channels with appropriate FEMA documentation.

Yes, an Indian LLP can set up an entity in GIFT IFSC, subject to FEMA’s ODI framework — since the IFSC entity, once incorporated, is treated as a person resident outside India. The LLP’s investment into the IFSC entity is treated as an overseas investment and must be reported to RBI. However, there is an important restriction to be aware of: under the ODI regulations, an Indian LLP engaged in financial services is required to obtain regulatory NOC before making such an investment, similar to the requirement for Indian companies. LLPs not engaged in financial services have a relatively simpler path. PKM assists in determining the exact ODI compliance steps applicable based on the LLP’s nature of business and the proposed IFSC activity.

A resident Indian individual can invest in a GIFT IFSC entity, but this is subject to the Liberalized Remittance Scheme (LRS) under FEMA, which currently permits remittances of up to USD 2,50,000 per financial year per individual for permissible capital and current account transactions. Investment into an IFSC entity under LRS is permitted, and the individual must report such investments appropriately. However, LRS has its limits — for larger investments or where the individual is a promoter of an operating business in IFSC, it is often more practical to route the investment through an Indian company or LLP to avoid LRS cap constraints. The right structure depends on the quantum of investment, the nature of the IFSC activity, and the individual’s overall financial profile.

Regardless of whether the investor is an Indian company, LLP, or individual, the core FEMA obligation stems from the fact that an IFSC entity is treated as a person resident outside India. This means every capital infusion into the IFSC entity must be reported to RBI as an overseas investment. Ongoing FEMA obligations include filing Annual Performance Reports (APR) with RBI for ODI investments, reporting any change in shareholding or capital structure, ensuring that all transactions between the Indian investor and the IFSC entity are at arm’s length and supported by proper transfer pricing documentation, and repatriating funds through designated banking channels. Non-compliance with FEMA reporting timelines attracts compounding penalties, so it is advisable to keep a FEMA-aware advisor involved from the time of initial investment.