The International Financial Services Centres Authority (IFSCA) has established a robust framework to facilitate the growth of TechFin and Ancillary Services in GIFT City. These services are critical for building a thriving financial ecosystem, supporting and enhancing the operations of financial institutions. The recent IFSCA (TechFin and Ancillary Services) Regulations, 2025 have unified the regulatory environment, providing a clear and transparent path for entities to establish and operate within the IFSC.

1. Categories and Activity Descriptions

The regulations encompass a broad range of services, with a strong emphasis on technology-driven solutions and essential support functions.

TechFin Services: Technology solutions that enable and optimize financial activities.

• Artificial Intelligence (AI) and Machine Learning (ML): AI-driven credit scoring, risk modelling, and fraud detection platforms. Banking units in the IFSC and non-resident entities can leverage these tools to automate credit assessments, enabling faster and more accurate decision-making for international clients.
• Blockchain and Distributed Ledger Technology (DLT): Secure, transparent, and low-cost platforms for cross-border payments. Intermediaries and non-resident entities can use DLT to reduce transaction costs and settlement times, while immutable ledgers provide a robust audit trail for compliance.
• Big Data Analytics: Services that analyze vast datasets to predict market trends and assess asset performance. Fund management entities and financial advisory firms in overseas markets can gain a competitive edge and make data-driven investment decisions.
• Cybersecurity: Advanced security solutions to protect financial data and systems from cyber threats. This is essential for financial intermediaries and non-resident entities to ensure data integrity and meet global compliance standards.
• Cloud Computing and IT Infrastructure: Scalable, secure cloud-based solutions for data storage, processing, and application hosting. These allow financial institutions in the IFSC or financial firms outside India to manage costs and scale efficiently.
• Regulatory Technology (RegTech) and Financial Crime Compliance (FCC): Automated solutions for regulatory compliance, including Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) measures. These activities are now regulated under the new framework and can be offered from the IFSC to global entities.
• Virtual and Digital Assets: Services enabling tokenization of assets such as securities or real estate, enhancing liquidity and accessibility. Service providers can achieve extensive global reach at minimal cost.

 

Ancillary Services: Professional and operational services that support financial institutions.

• Auditing and Accounting Services: Financial auditing, accounting reviews, and preparation of financial statements to ensure transparency and compliance.
• Legal and Advisory Services: Covering legal documentation, tax planning, and business advisory support, vital for intermediaries and overseas entities.
• Human Resources (HR) and Payroll: Staffing, recruitment, and payroll management for IFSC and non-resident entities. Indian firms setting up in the IFSC jurisdiction can capture significant opportunities, with relocation benefits including tax exemptions on income under prevailing provisions.
• Administration Services: Operational support to ensure smooth day-to-day business functions. With the expansion of IFSC permissions, the demand for such services is expected to grow significantly.
• Trusteeship Services: Acting as trustees for financial products such as AIFs, InvITs, and REITs.
• Fund Administration Services: Managing fund operations, including investor relations, reporting, and accounting.
• Global In-House Centers (GICs): Captive units of multinational corporations providing services such as IT, BPO, research, and analytics.
• Knowledge Process Outsourcing (KPO) Services: Specialized research and analysis services, for example, equity research and due diligence for foreign investment banks.

 

2. Who Can Set Up and How

Eligible entities include Indian and foreign companies, LLPs, and branches of foreign firms. The regulations mandate a structured application process through the Single Window IT System (SWIT). All new and existing service providers must register with the IFSCA, with a transition period of up to 24 months granted for existing entities.

 

3. Benefits of the Framework

The unified framework delivers multiple advantages:

• Ease of Doing Business: A single, streamlined regulatory structure simplifies setup and operations.
• Regulatory Certainty: Clear guidelines reduce ambiguity and strengthen compliance.
• Global Alignment: The framework aligns with international standards, including those of the Financial Action Task Force (FATF), enhancing GIFT City’s credibility for global players.
• Promotion of Innovation: The ecosystem supports startups and tech firms to innovate and test new solutions.

 

4. Opportunities for Financial Intermediaries

The framework unlocks a wide range of opportunities for intermediaries in the IFSC:

• Enhance Efficiency: Advanced technologies like AI and blockchain help automate processes, cut costs, and improve service delivery.
• Access New Markets: The ability to serve non-resident clients and operate in foreign currencies expands global reach.
• Strengthen Operations: Ancillary services, legal, accounting, and HR enable intermediaries to focus on core business while ensuring compliance and operational excellence.
• Foster Innovation: GIFT City’s ecosystem encourages the adoption of cutting-edge technologies and the development of new business models.

 

5. Conclusion

The IFSCA’s new regulatory framework for TechFin and Ancillary Services marks a pivotal step in positioning GIFT City as a premier global financial hub. By providing clarity, fostering innovation, and strengthening regulatory oversight, the framework benefits both service providers and financial intermediaries.

It is an exciting time to venture into the IFSC jurisdiction. A wide range of other services is also permitted for qualified service providers. To learn more, you may schedule a free consultation call or visit: www.pkmadvisory.com