GIFT City And The Next GCC Wave: The Regulatory Opportunity, The Structural Limits And The Route Multinationals Should Actually Consider

Can GIFT City become India’s next major destination for Global Capability Centres? India’s Global Capability Centre (“GCC”) story has entered a new phase.

The first generation of Indian GCCs was largely built around cost arbitrage and access to engineering and technology talent. The second generation moved into finance, analytics, risk, cybersecurity, research and other specialised functions. The next generation is increasingly about where global value chains should be legally, operationally and economically anchored.

That is where Gujarat International Finance Tec-City (“GIFT City”) becomes particularly interesting.

GIFT City is no longer simply an infrastructure project aspiring to become an international financial centre. It has developed into India’s operational International Financial Services Centre (“IFSC”), supported by the International Financial Services Centres Authority (“IFSCA”), a dedicated Special Economic Zone (“SEZ”) framework and, increasingly, a state-level policy architecture designed to attract GCCs.

The Government of Gujarat’s GCC Policy 2025–30 expressly seeks to position Gujarat as a leading destination for high-value GCCs, with targets of attracting at least 250 new GCC units, more than 50,000 jobs and ₹10,000 crore of investment.

But there is an important legal distinction that multinational groups should understand before deciding that “GIFT City” automatically means “IFSC GCC”.

It does not.

The real opportunity lies in understanding the interaction between three different frameworks:

1. the IFSCA framework for Global In-House Centres (“GICs”);
2. the SEZ/IFSC framework applicable to eligible units in GIFT City; and
3. the Gujarat GCC Policy 2025–30, which is broader and is intended to attract GCCs across

The distinction is not academic. It can determine the permissible activities, regulatory approvals, tax position, manner of servicing Indian group entities, foreign exchange treatment and ultimately whether a proposed structure works at all.

1. From “Where is the talent?” to “Where should the capability sit?”

Traditional GCC location decisions have generally revolved around five questions:

• Is there sufficient talent?
• Is the operating cost competitive?
• Is the infrastructure reliable?
• Can the centre scale?
• Is there a mature ecosystem of comparable multinational operations?

Bengaluru, Hyderabad, Pune, Chennai and Gurugram built their GCC leadership positions largely on these fundamentals.

GIFT City brings a different proposition.

Its pitch is not merely that India can provide the talent. It is that a multinational may be able to place certain financial, treasury, risk, compliance, technology and other high-value international functions inside a purpose-built financial services ecosystem with a specialised regulatory architecture.

This distinction matters.

For a conventional technology GCC, the principal question may be whether GIFT City can compete with Bengaluru or Hyderabad for engineers.

For a financial-services group, the question is different:

Can GIFT City become the jurisdiction from which the group’s global financial capabilities are organised and delivered?

The answer is increasingly yes—but only for the right kind of GCC.

2. The most important development: India’s GIC framework has matured

A major development that materially changes the analysis is the notification of the International Financial Services Centres Authority (Global In-House Centres) Regulations, 2025 (“GIC Regulations 2025”) on 24 December 2025. These regulations replaced the earlier 2020 framework.

The stated objective of the regulations is to operationalise GICs as a financial service and develop IFSCs as a global hub for the delivery of high-value financial and related services.

The 2025 framework also formally recognises multiple operating models, including:

• captive centres;
• shared services centres;
• Build-Operate-Transfer (“BOT”);
• joint ventures;
• hybrid structures; and
• other models permitted by

A Financial Institution Group can establish its GIC directly or through a third-party service provider. This is significant because it moves the conversation beyond the traditional “captive subsidiary” model. However, there is an equally important limitation.

3. A GIC under IFSCA is not the same thing as every GCC

The expression “GCC” is used commercially as an umbrella term.

The IFSCA’s GIC Regulations use a much narrower regulatory concept.

Under the 2025 Regulations, a GIC is a service provided by a GIC Unit relating to financial products and financial services to a Financial Institution Group.

A Financial Institution Group includes groups engaged in financial services or financial activities, including banks, NBFCs, financial intermediaries, investment banks, insurers, reinsurers, actuaries, brokerages, funds, stock exchanges, clearing corporations, depositories, custodians and similar financial institutions.

The implication is fundamental:

A technology company, manufacturing group, healthcare group or consumer business does not become an IFSCA GIC simply by incorporating a subsidiary in GIFT City.

Its proposed activities may still be capable of being housed in GIFT City under another applicable framework—including the SEZ framework and Gujarat’s GCC Policy—but the IFSCA GIC regime cannot automatically be used as the regulatory basis.

This is perhaps the most important structuring distinction for any multinational considering GIFT City.

4. Two routes to the GIFT City GCC opportunity

The emerging GIFT City model can therefore be viewed through two broad routes. Route 1: The IFSCA GIC

This is the specialised route for Financial Institution Groups. It is particularly relevant for:

• banking operations;
• capital markets;
• insurance;
• reinsurance;
• investment management;
• financial risk;
• financial analytics;
• regulatory and compliance functions connected with financial services;
• financial technology functions connected with financial products and services; and
• other high-value financial and related activities falling within the regulatory

The 2025 Regulations permit a GIC Unit to provide services to non-resident group entities, subject to the regulatory conditions. They also permit services to Indian group entities, but such Indian revenue is capped at 10% of the GIC Unit’s total revenue for the relevant financial year.

That 10% rule is a particularly important structuring consideration.

A group cannot simply establish an IFSC GIC and use it as a general-purpose India shared-services company.

Route 2: The broader GCC/SEZ model

The second route is potentially much broader.

Gujarat’s GCC Policy 2025–30 covers GCCs across sectors including financial services, engineering and R&D, technology, automotive, healthcare and life sciences, consumer, retail, media and telecom, industrial manufacturing and other sectors.

The policy is expressly designed to attract high-value GCC operations into Gujarat and provides fiscal and non-fiscal incentives subject to eligibility conditions.

The Gujarat government currently identifies, among other benefits:

• CAPEX support;
• OPEX support;
• employment generation incentives;
• EPF reimbursement;
• interest assistance;
• electricity duty reimbursement;
• lease rental support;
• skill-development support; and
• quality-certification

The applicable amounts and conditions depend on the category of the eligible unit and the relevant policy requirements.

This means that GIFT City should not be viewed only through the IFSCA lens.

The larger opportunity is to consider GIFT City as part of a broader Gujarat GCC ecosystem, with the IFSC framework providing an additional layer of opportunity for qualifying financial-sector businesses.

5. Why GIFT City is particularly attractive for financial GCCs

For financial-services groups, GIFT City’s proposition becomes considerably stronger.

Unlike a conventional Indian GCC, an eligible IFSC GIC operates within an ecosystem designed specifically around international financial services.

IFSCA functions as the unified regulatory authority for financial services in the IFSC, while GIFT City has developed an ecosystem covering banking, capital markets, fund management, insurance, fintech, finance companies, aircraft and ship leasing and GICs.

This creates a potentially powerful network effect.

A financial-services group setting up a capability centre does not necessarily need to build an ecosystem around itself. It can locate within an ecosystem that already contains banks, financial institutions, funds, exchanges, professional advisers, technology providers and other financial-sector participants.

That can be particularly valuable for functions such as:

Risk + Compliance + Technology + Analytics + Treasury + Operations

Rather than treating these functions as separate back-office activities, a multinational can potentially build an integrated financial capability centre around them.

6. The tax proposition is powerful—but should not be oversimplified

One of the most frequently cited advantages of IFSC structures is the tax regime.

Section 80LA of the Income-tax Act, 1961 provides a deduction for eligible income of a Unit of an IFSC.

For an eligible IFSC Unit, the provision allows a deduction of 100% of specified income for any ten consecutive assessment years out of fifteen years, subject to the statutory conditions. The deduction applies to income from the business for which the unit has been approved for setting up in the IFSC.

That last part is critical. The proposition is not:

“Any company located in GIFT City gets a ten-year tax holiday.”

The legally correct proposition is:

An eligible IFSC Unit may claim the applicable deduction under Section 80LA for qualifying income, subject to the statutory and regulatory conditions and the approval obtained for its business.

The distinction becomes especially important for GCC structures involving IP, royalties and multiple streams of service income.

The tax analysis therefore has to begin with the approved activity and the nature of the income, rather than with the location alone.

7. A practical structuring question: Can a US-owned WOS in GIFT City hold IP and provide services globally?

Consider a hypothetical multinational structure.

A US LLC proposes to establish an Indian wholly owned subsidiary (“IndCo”) in GIFT City.

IndCo would:

• develop and own intellectual property;
• register and maintain that IP;
• license the IP to a French operating company under a master licence;
• receive royalty income from the French group; and
• provide centralised digital services to group entities, including client support, marketing, billing and HR.

At first glance, the structure appears to fit comfortably within the broader GCC narrative. But the first legal question should not be:

“Can a WOS be incorporated in GIFT City?”

The better question is:

“Which regulatory regime is IndCo actually proposing to operate under?”

That distinction can change the entire analysis.

8. The first structuring test: Is the US parent a Financial Institution Group?

If the US LLC and its group fall within the definition of a Financial Institution Group, and the proposed services relate to financial products or financial services, the IFSCA GIC framework may be relevant.

If they do not, the proposed IndCo should not be described as an IFSCA GIC merely because it is located in GIFT City.

This is particularly important for businesses whose principal activities are technology, software, healthcare, manufacturing, consumer products or other non-financial activities.

For those businesses, the analysis should instead move toward:

SEZ Unit + Gujarat GCC Policy + applicable IT/ITeS framework + Indian corporate law + FEMA + tax + transfer pricing.

This is where GIFT City’s broader proposition becomes more interesting than the narrow GIC label.

9. IP ownership can change the GCC from a cost centre into a value centre

One of the most interesting developments in the GCC model is the movement from a simple service-centre structure toward IP-led and value-creating structures.

A conventional GCC may simply provide services to its overseas parent. A more sophisticated GCC can potentially:

• develop technology;
• create and maintain IP;
• undertake R&D;
• commercialise intellectual property;
• license technology to group entities;
• manage global digital platforms; and
• provide centralised services across multiple The proposed IndCo structure illustrates this evolution.

If the Indian company is genuinely responsible for developing, controlling and exploiting IP, the economic substance of the Indian operation can be materially different from that of a routine captive service provider.

But that also means the legal and tax analysis becomes more sophisticated. The group would need to examine:

• ownership of pre-existing IP;
• development of new IP;
• employee and contractor arrangements;
• IP assignment documentation;
• licensing arrangements;
• royalty pricing;
• transfer pricing;
• DEMPE functions;
• withholding taxes;
• GST and place-of-supply issues;
• FEMA considerations;
• permanent establishment and tax residency considerations in relevant foreign jurisdictions; and
• substance

In other words, IP ownership cannot simply be inserted into a GCC structure because it produces a more attractive tax result.

The allocation of profits has to follow the functions, assets and risks actually undertaken by the Indian company.

10. Royalty income and service income should not be treated as one pool This is another area where GCC structuring often becomes overly Suppose IndCo receives:
11. royalty income from licensing IP to the French company; and
12. service income for digital, marketing, client support, HR and billing These are commercially different streams of income.

The documentation, pricing methodology and tax analysis may therefore also be different.

The royalty arrangement would need to establish:

• what IP is being licensed;
• who legally owns it;
• the territory of the licence;
• permitted use;
• exclusivity, if any;
• duration;
• consideration;
• withholding tax treatment; and
• transfer-pricing

The service arrangement would similarly need to define:

• scope of services;
• service levels;
• cost base;
• mark-up;
• allocation methodology;
• personnel;
• risk assumption; and
• termination

A robust GCC structure therefore begins with functional architecture, not tax incentives.

11. And what happens to the profits?

Once IndCo generates profits, the group will naturally ask a simple question: Can those profits be returned to the US shareholder?

Yes, subject to the applicable corporate, foreign exchange and tax requirements.

A company incorporated in GIFT City remains subject to the Companies Act, 2013 for its corporate law requirements. There is no general prohibition under company law against an Indian subsidiary declaring dividends to its non-resident shareholder.

Section 123 governs declaration of dividends, including the requirement that dividends generally be declared out of profits available for distribution, after the prescribed adjustments.

Where adequate profits are not available, dividends out of free reserves are subject to prescribed conditions.

Accordingly, there is no general statutory rule that limits dividend payments to a fixed percentage of the Indian company’s profits where sufficient distributable profits are available.

However, this should not be confused with an unrestricted ability to upstream cash.

Before dividends are paid, the company must consider:

• distributable profits;
• financial statements;
• Board and shareholder approvals, as applicable;
• corporate records;
• withholding tax;
• applicable tax treaty provisions;
• FEMA requirements;
• authorised dealer bank processes; and
• any other applicable reporting

The dividend is also fundamentally different from a royalty or service payment. A royalty is consideration for IP.

A service fee is consideration for services.

A dividend is a distribution of shareholder returns.

The three should not be used interchangeably as mechanisms for moving profits across borders.

12. The US LLC and “hybrid trust” question deserves separate attention

A structure involving a US LLC held through or in conjunction with a hybrid trust requires additional diligence.

The fact that the ultimate economic ownership is foreign does not by itself eliminate the need to examine the ownership chain.

Among other matters, the group should assess:

• the legal nature of the US LLC;
• tax classification of the LLC in the US;
• the legal status and role of the trust;
• ultimate beneficial ownership;
• control and governance;
• source of funds;
• FEMA/FDI eligibility;
• Press Note 3 implications, where relevant;
• tax residency and treaty entitlement;
• beneficial ownership for withholding-tax purposes; and
• the ability of the relevant shareholder to receive dividends from

The key point is that “US-owned” should not be treated as the end of the ownership analysis.

For cross-border structures, the ownership chain and the tax characterisation of each entity can matter as much as the place of incorporation.

13. Press Note 3: the ownership chain matters

Foreign investment into an Indian company is generally permitted subject to the applicable FDI policy, sectoral caps and entry routes.

However, Press Note 3 introduced additional scrutiny where the investor or beneficial owner falls within the specified land-border-country framework.

Accordingly, where the proposed structure involves multiple entities, trusts or intermediate holding arrangements, the analysis should not stop at the immediate shareholder.

The beneficial ownership position should be established before the investment is implemented.

For a straightforward US-owned structure this may be relatively uncomplicated. For a structure involving a hybrid trust or multiple layers, however, it becomes a specific diligence item rather than a drafting formality.

14. The SEZ distinction: GIFT City is not one regulatory zone

Another common misconception is to use “GIFT City”, “GIFT SEZ” and “GIFT IFSC” interchangeably.

They are not synonymous.

GIFT City contains a Domestic Tariff Area and a Special Economic Zone, with the IFSC operating within the SEZ framework.

For legal structuring, therefore, the first questions should include:

• Where exactly will the proposed entity operate?
• Is it an SEZ Unit?
• Is it an IFSC Unit?
• Is it seeking IFSCA registration?
• Is it seeking recognition as a GIC?
• What activity has been approved?
• Which tax incentive is being relied upon?
• Which regulator has jurisdiction over the activity? This is more than terminology.

It determines the legal and regulatory framework that follows.

15. The 10% India-revenue rule changes the GCC conversation

For an IFSCA GIC, the 2025 framework permits services to Indian group entities, but such services cannot exceed 10% of the GIC Unit’s total revenue for the relevant financial year.

This is a particularly important development.

The older mental model of a GIC as an India-based back office serving the entire Indian group is therefore incomplete.

The IFSC GIC is fundamentally oriented toward cross-border financial and related services. That makes GIFT City particularly attractive where the intended operating model is:

India talent → GIFT IFSC → global financial group

rather than:

India talent → GIFT IFSC → Indian group companies.

For a multinational whose principal customers are overseas group entities, this distinction can be a major advantage.

16. The regulatory framework is becoming more mature—but also more sophisticated

GIFT City’s regulatory environment should not be mistaken for a regulatory vacuum.

The 2025 GIC Regulations require, among other things, fit-and-proper standards and the appointment of a Principal Officer and Compliance Officer.

The Principal Officer and Compliance Officer must be full-time employees and based in the IFSC. GIC Units also have specified reporting obligations, including financial reporting to IFSCA in US dollars unless otherwise specified.

This is a sign of maturity.

A sophisticated multinational may actually prefer this environment because regulatory responsibilities are clearer and governance is built into the operating model.

But it also means that GIFT City should not be sold internally as merely a “tax-efficient back office”.

It is better understood as a regulated cross-border operating platform.

17. What about non-financial GCCs?

This is where the broader Gujarat policy becomes critical.

Gujarat’s GCC Policy is not limited to financial institutions. It expressly seeks to attract GCCs across a wide range of industries and functions.

The policy targets at least 250 new GCC units, 50,000+ jobs and ₹10,000 crore of investment over its policy period.

This provides an important counterweight to the narrower IFSCA GIC framework.

A technology or manufacturing multinational may therefore have a strong case for establishing its GCC in the GIFT City ecosystem even if it does not qualify as an IFSCA GIC.

The question then becomes one of which combination of state incentives, SEZ benefits, corporate structure and operating model produces the best outcome.

That is a much more useful question than simply asking:

“Does GIFT City allow GCCs?”

18. The real competitive advantage may be specialisation—not scale GIFT City is unlikely to displace Bengaluru, Hyderabad or Pune Those ecosystems have enormous advantages:
    • deep technology talent pools;
    • established multinational networks;
    • experienced GCC leadership;
    • mature vendor ecosystems;
    • universities and specialist institutions;
    • large-scale delivery experience; and
    • significant peer

GIFT City’s opportunity is therefore unlikely to be a race to become “another Bengaluru”.

Its opportunity is to become the place where specific categories of global capabilities are structurally better located.

The strongest candidates may include:

Financial services

Banking, capital markets, insurance, reinsurance and investment management. Risk and compliance

Enterprise risk, regulatory reporting, financial crime, compliance analytics and controls. Treasury

Global treasury, liquidity management, financial planning and cross-border financial operations. FinTech

Technology supporting payments, capital markets, wealth management and financial infrastructure.

IP and digital platforms

Where the underlying business model and regulatory framework permit the relevant activities. Global finance operations

Accounting, financial analytics, controllership and other high-value functions, subject to the applicable framework.

The opportunity is therefore not necessarily:

“GIFT City versus Bengaluru.”

It may be:

“GIFT City for the functions that benefit from being close to India’s emerging international financial ecosystem.”

19. The new GCC decision matrix

For a multinational evaluating India, the location question may increasingly look like this:

The conclusion is therefore not that every multinational should move its GCC to GIFT City. The conclusion is more interesting:

GIFT City may allow multinational groups to rethink what their GCC is actually supposed to do.

20. The strategic question for multinational groups

A multinational considering GIFT City should not begin with incorporation. It should begin with a functional map.

Step 1: Identify the functions

What will the Indian centre actually do?

Technology? Finance? Compliance? IP? R&D? Treasury? HR? Marketing? Customer support? Step 2: Identify the customers

Will the centre serve:

• overseas group entities;
• Indian group entities;
• third parties; or
• a combination?

Step 3: Identify the regulatory route Is the entity:

• an IFSCA GIC;
• an SEZ Unit;
• a Gujarat GCC;
• an IT/ITeS operation; or
• a combination requiring multiple approvals? Step 4: Identify the economic model

Will the Indian entity earn:

• service fees;
• royalties;
• licensing income;
• financing income;
• other operating income; or
• dividends from investments? Step 5: Align substance with economics Who owns the IP?

Who develops it?

Who manages the risks? Who employs the people?

Who controls the decisions? Who bears the costs?

Who receives the economic return? Step 6: Only then model the tax

The tax analysis should follow the business model—not the other way around.

21. So, can GIFT City become a GCC hub?

Yes—but probably not in the way the phrase is currently being used.

GIFT City’s strongest proposition is not to replicate India’s existing GCC giants.

Its opportunity is to create a specialised cross-border capability ecosystem.

The 2025 GIC Regulations materially strengthen this proposition for Financial Institution Groups by formally recognising multiple operating models and permitting qualifying GIC Units to provide financial and related services to global group entities.

At the same time, Gujarat’s GCC Policy 2025–30 creates a broader platform for GCCs across sectors, giving multinational enterprises another route into Gujarat’s emerging GCC ecosystem.

The result is potentially more powerful than either framework standing alone.

22. The bigger idea: GIFT City could become India’s “global function zone”

The long-term opportunity may not be to classify GIFT City as merely a financial centre or merely a GCC destination.

It could become something more significant:

a jurisdiction in which multinational groups locate functions that sit at the intersection of finance, technology, regulation, IP and global operations.

That is a fundamentally different proposition from the first-generation GCC model. The first-generation model asked:

“How much can India save us?”

The next-generation model asks:

“What global functions should India own?”

And that is where GIFT City becomes strategically interesting.

23. Conclusion: GIFT City is not the next Bengaluru—and that may be its advantage

The most realistic future for GIFT City is not to become India’s largest GCC location by headcount. It may instead become India’s most specialised GCC jurisdiction.

For financial institutions, the IFSCA GIC framework provides a regulatory architecture specifically designed around cross-border financial and related services.

For broader multinational enterprises, Gujarat’s GCC Policy provides a wider state-level platform covering technology, engineering, R&D, healthcare, manufacturing, consumer and other sectors.

For groups considering IP ownership, digital services and cross-border licensing, GIFT City can offer an attractive structuring environment—but only after the precise legal route, approved activities, tax eligibility, transfer-pricing model and regulatory permissions have been established.

The critical lesson is therefore simple:

Do not ask whether GIFT City is a GCC hub. Ask which GCC belongs in GIFT City, under which regulatory framework, and why.

That is where the real opportunity lies.

And if the next generation of Indian GCCs is going to be defined not by the number of employees but by the value of the functions they own, GIFT City may have a very different role to play in India’s GCC story.

This article is intended for general informational purposes only and does not constitute legal, tax, regulatory or investment advice. The applicability of any regulatory framework, incentive or tax benefit will depend on the facts of the proposed structure, the nature of the activities, approvals obtained and the law in force at the relevant time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.