The International Financial Services Centres Authority (IFSCA) has issued a revised framework for the establishment and operation of International Trade Finance Services (ITFS) platforms within India's International Financial Services Centres (IFSC). These guidelines, notified on 11 April 2025, supersede the original 2021 guidelines and aim to enhance India's positioning as a global trade finance hub. The ITFS framework provides a legally recognised, digital-first environment for enabling cross-border trade financing through instruments such as factoring, forfaiting, bill discounting, and supply chain finance.
The new framework addresses operational scalability and regulatory risk and is intended for entities with prior experience in financial market infrastructure or fintech services. The revised framework prioritises strong technological readiness, sound financial standing and governance resilience in applicant entities.
What are International Trade Finance Service (ITFS) Platforms at IFSC
The ITFS platforms are the first regulated digital platforms that enable global exporters and importers at competitive prices through electronic proofs. These services inter-alia include factoring, forfaiting, bill discounting and supply chain financing. The key principle of allowing ITFS in IFSC is to help bridge the financing gap for exporters and importers both in India and globally.1.
The ITFS operator may facilitate primary and secondary transactions in various trade finance products, including factoring, reverse factoring, bill discounting under letters of credit, pre-shipment credit, forfaiting, and other forms of structured trade financing. Secondary market transactions are permitted for the listed products.
Entities wishing to expand beyond these core activities must seek separate approval from IFSCA. For decision-makers planning product innovation or expansion, this creates opportunities for modular structuring subject to regulatory vetting.
Eligibility Framework for ITFS Operators
Entities intending to set up an ITFS must incorporate a new company under the Companies Act, 2013 and apply for registration as a Finance Company under the IFSCA (Finance Company) Regulations, 2021. The parent entity must have at least three years of demonstrable experience in managing fintech platforms or financial trading infrastructure. Further, the entity must commit to establishing adequate infrastructure within the IFSC jurisdiction, including physical office space, communication systems, and qualified staffing. A clear and favourable compliance history will be critical to receiving approval.
Capital Adequacy and Technology Infrastructure
The minimum capitalisation requirement is USD 200,000 in owned funds. The platform must be technologically equipped to facilitate electronic proofing, real-time quote dissemination, invoice validation, and secure participant communication. As is standard for fintech in India, ITFS platforms are required to have a tested Business Continuity Plan (BCP), a disaster recovery site, and robust surveillance systems to monitor transactions, price movements, and market conduct.
Risk Management and Compliance Monitoring
All ITFS operators are required to implement a comprehensive enterprise-level risk management framework that addresses operational, financial, and technological risks. The guidelines also mandate real-time surveillance capabilities for transactions processed through the platform.
Currency Framework and Regulatory Implications
The books of accounts must be maintained in USD. However, trade transactions may be settled in any permitted foreign currency. Entities can also open INR accounts under the amended Foreign Exchange Management (Deposit) Regulations, 2016. This flexibility allows for multi-currency structuring of deals, enabling ITFS platforms to serve diverse trading counterparties globally.
Conclusion
The IFSCA ITFS framework reflects India's commitment to creating a robust, digital-first trade finance infrastructure with global relevance. IFSCA is clearly signalling its intent to position IFSCs as credible and efficient hubs for cross-border trade financing. For eligible financial institutions and fintech players, this presents a timely opportunity to participate in a regulated ecosystem with significant commercial upside.
However, the path to entry is stringent and requires more than regulatory compliance- it demands strategic alignment with IFSCA's vision of digital transparency, operational resilience, and financial integrity. Entities must evaluate their readiness to meet these elevated benchmarks, particularly in terms of infrastructure, governance, and technological capability.
For decision-makers exploring market entry or partnerships, the revised guidelines are not merely a compliance checklist but a strategic framework for building globally competitive ITFS platforms. As trade becomes increasingly digitised, early movers within this regulated environment will likely play a pivotal role in shaping the future of trade finance in and beyond India.
Footnote
1 Review of Guidelines for setting up and operation of International Trade Financing Services Platform (ITFS), International Financial Services Centres Authority, available at: International Financial Services Centres Authority.
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