REGULATORY BOUNDARIES, PERMISSIBLE BUSINESS ACTIVITIES AND PROCEDURE OF INCORPORATION OF COMPANY/WOS IN THE GIFT CITY

GIFT CITY stands for Gujarat International Finance Tec- City. It is a planned business district in the state of Gujarat, India, conceived by the Government of India and Government of Gujarat as a global financial and services hub and as the location for India's first International Financial Services Centre (IFSC). GIFT CITY is an integrated development comprising of a Multi-Services Special Economic Zone (SEZ) and a separate Domestic Tariff Area (DTA).

Within the SEZ, the Government of India has notified an International Financial Services Centre (GIFT IFSC), which is a specialised jurisdiction for cross-border financial services in non-INR currencies.

GIFT City has a dual character: it is a notified Special Economic Zone (SEZ) and, within that SEZ, a designated International Financial Services Centre (IFSC) under sec on 18 of the SEZ Act, 2005 and the International Financial Services Centres Authority Act, 2019.

Legal/ Regulatory Framework- Structure of GIFT City, GIFT SEZ and GIFT IFSC

What is an IFSC and how GIFT IFSC relates to the SEZ

IFSC in India is approved and regulated by the Government of India under the Special Economic Zones Act, 2005. An IFSC unit is treated as a non-resident under the Foreign Exchange Management framework, indica ng that it is intended to handle offshore / cross-border financial transactions even though physically in India.

GIFT City SEZ IFSC deals with flow of finance, financial products and services across borders and caters to customers outside the domestic economy. IFSC Units are treated as non-resident for FEMA purposes and transact normally in freely convertible foreign currencies.

A broad set of sectors under the SEZ / IFSC business platform are Banking, Capital Markets, Fund

Management, Insurance, IT & ITES, Engineering, Fintech, Automobiles, Pharmaceuticals, Bio-Tech, etc.

Regulatory categories under IFSCA regulations and circulars

Within GIFT City, the International Financial Services Centre (GIFT IFSC) is a distinct regulatory jurisdiction carved out of the GIFT SEZ. In this IFSC area:

• IFSCA is the unified regulator for financial products, financial services and financial institutions. The powers of RBI, SEBI, IRDAI, PFRDA and related financial-sector statutes do not apply within IFSC for those activities; those powers are shifted to IFSCA.
• SEZ Act/Rules apply because the IFSC sits inside a notified SEZ, but with specific IFSC-focused carve-outs (e.g. exemption from net foreign exchange performance for IFSCA-regulated financial units).
• The "Administrator (IFSCA)" now exercises Development Commissioner powers for IFSC units under the SEZ Act, so IFSC entities deal largely with IFSCA/Administrator for both IFSC and SEZ approvals.

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