An International Financial Service Centre
("IFSC") essentially caters to customers
outside the jurisdiction of the host domestic economy, dealing with
flows of financial products and services to and from the host
economy with foreign entities1. It is considered
preferable to set up IFSCs in SEZs in India since the compliance
requirements in SEZs are comparatively lower than outside SEZs. The
Ministries of Commerce and Industry and Finance have issued various
notifications on the procedure for setting up of IFSCs and
regulation of the same.
The Gujarat International Finance Tec-City ("Gift
City") was the first IFSC set up in India by the
Central Government pursuant to the powers granted to it under
Section 18 of the Special Economic Zones
("SEZ") Act, 2005. Presently, Gift City
is the only IFSC permitted to function in India. All its
transactions are required to be carried out in foreign currency,
however IFSC units may denominate administrative and
