India's ambitious financial center in Gujarat state is rapidly attracting global institutions, with two major Taiwanese banks pledging to establish operations as the facility positions itself as a key bridge between India's growing economy and international markets.
The Gujarat International Finance Tec-City, known as GIFT City, has registered more than 850 financial entities since its establishment, with banking assets reaching US$90 billion as of May 2025. The International Financial Services Centre within GIFT City now hosts 15 foreign banks and 16 Indian banks, processing over US$1.28 trillion in cumulative transactions.
Two-zone structure offers flexibility
GIFT City operates under a dual-zone structure designed to accommodate different business needs. The International Financial Services Centre (IFSC) sits within a Special Economic Zone (SEZ) where financial companies can establish operations with special income tax exemptions and GST exemptions. Outside the SEZ lies the Domestic Tariff Area (DTA), where technology companies can access government incentives and subsidies but operate under standard domestic tax rules.
Taiwanese banks enter the market
CTBC Bank and Fubon Bank have expressed formal interest in establishing operations at GIFT IFSC, according to K. Rajaraman, chairman of the International Financial Services Centres Authority (IFSCA). The move reflects growing economic ties between India and Taiwan, particularly as more than 250 Taiwanese companies have already invested in India's expanding technology and manufacturing sectors.
"Taiwanese banks can provide crucial support to their companies already operating in India," said Rajaraman during recent media discussions in Taipei. "As more Taiwanese firms enter India's semiconductor and electronics ecosystem, GIFT City can serve as their financial anchor."
Global capability centers drive growth
GIFT City is emerging as a major destination for Global Capability Centers (GCCs), with Power Semiconductor Manufacturing Company (PSMC) planning to establish its Global Capability Center in GIFT City to support its massive manufacturing operations.
The technology support centers in GIFT City will serve PSMC's US$11 billion fabrication plant being developed with Tata Electronics in nearby Dholera. German chip designer Infineon and US-based Analog Devices have already established development centers in GIFT City's domestic area, demonstrating the facility's growing appeal to global semiconductor companies.
"The manufacturing hub can be in Dholera, which is the manufacturing zone, and the tech part, which is the capability center, can be in GIFT," explained Rajaraman, describing the integrated approach linking production facilities with research and development operations.
Treasury and financial services integration
Beyond research and development centers, GIFT City's IFSC zone offers comprehensive financial services to support manufacturing operations. Rajaraman highlighted how semiconductor companies could leverage the facility's tax-advantaged banking infrastructure for broader financial operations.
"Many of these companies will need to raise capital, they will need to issue bonds, they will need to do hedging on their foreign exchange," said Rajaraman. "We expect that not only that many of these institutions, like PSMC and all, can use the GIFCITY to set up treasury centers, because once they start exporting and importing, they will have to do cash management on various forms of foreign exchange."
Taiwanese semiconductor companies could consider establishing holding companies within the IFSC zone to benefit from tax exemptions, while also creating treasury operations to manage their financial requirements. The facility provides what officials describe as "an efficient platform, a tax-efficient platform for them to carry out the financial operations required for the technology companies."
Strategic location for supply chains
GIFT IFSC's appeal stems partly from its proximity to India's emerging semiconductor corridor in Dholera.
The facility offers International Banking Units (IBUs) that allow foreign banks to use their entire balance sheets for Indian operations while dealing in foreign currencies. This structure particularly benefits Taiwanese banks supporting their clients' India expansion, as companies can access both manufacturing incentives and financial services in the same region.
Government incentives drive growth
India's federal government provides up to 50% subsidies for semiconductor investments, while Gujarat state adds another 20%, creating a combined 70% subsidy package. The "pari passu" structure means companies receive subsidies as they invest, rather than after project completion.
Companies operating in GIFT City's domestic area, such as semiconductor development centers, can access these government incentives and subsidies from both federal and Gujarat state authorities. However, these companies would not be eligible for the special tax concessions available to entities within the IFSC zone.
For Global Capability Centers, Gujarat offers additional incentives under its GCC policy, including capital expenditure reimbursements, operational expense subsidies covering power costs and rental support, and employee provident fund contribution reimbursements—100% for female employees and 75% for male employees.
GIFT IFSC entities enjoy significant tax advantages, including a 10-year tax holiday on business income, no securities transaction taxes, and reduced withholding taxes. Foreign universities can also establish branches with complete regulatory autonomy and profit repatriation rights.
Financial ecosystem expansion
The center has developed a comprehensive financial infrastructure, hosting two international stock exchanges with a monthly turnover exceeding US$101 billion in April 2025. Over US$65 billion in debt securities have been listed, including US$15.4 billion in green and sustainable bonds.
Aircraft leasing has emerged as a major sector, with 34 registered lessors managing 253 aircraft and helicopters. This addresses India's aviation market needs, as the country's airlines pay approximately US$5 billion annually in lease rentals, with 75% of India's fleet currently leased from Ireland.
Technology and innovation focus
Beyond traditional banking, GIFT City houses technology companies, including Google, IBM, Capgemini, and Accenture, in its domestic area, while financial technology firms operate within the special economic zone. The facility has authorized 42 fintech entities and established regulatory sandboxes for innovation testing.
Bank of America operates the largest Global Capability Center in GIFT City with over 2,400 employees, demonstrating the facility's capacity to host major international operations. Fund management represents another growth area, with 172 registered entities managing 263 funds targeting US$55 billion in commitments.
Infrastructure and connectivity
GIFT City spans 886 acres with 23 operational buildings and 37 under construction. The smart city features district cooling systems, automated waste management, and uninterrupted power supply. Future connectivity includes India's first bullet train linking Mumbai and metro connections to Ahmedabad.
The facility's strategic location allows operations across time zones from Japan to the United States, while regulatory processes typically require 45-60 days for licensing, compared to longer periods in other jurisdictions.
Broader India-Taiwan economic relations
The developments occur as India targets becoming a US$5 trillion economy while building domestic semiconductor manufacturing capabilities. Taiwan's expertise in semiconductor design and manufacturing aligns with India's "Production Linked Incentive" schemes, which have attracted multiple Taiwanese electronics companies.
India's digital payment infrastructure, including the Unified Payments Interface, which processes billions of transactions monthly, creates additional opportunities for Taiwanese fintech companies considering GIFT City operations.
IFSCA plans to establish a memorandum of understanding with Taiwan's Financial Supervisory Commission to facilitate cross-border financial cooperation, potentially streamlining regulatory processes for Taiwanese institutions entering the Indian market.
The center aims to reach US$100 billion in assets and 2,200 entities by 2030, positioning itself as a major international financial hub serving both Indian and global markets.
K. Rajaraman, chairman of the International Financial Services Centres Authority (IFSCA) (left), and Manharsinh Laxmanbhai Yadav, new Director General of India Taipei Association (ITA) (right). Credit: DIGITIMES Asia
Article edited by Jack Wu
