Gujarat International Finance Tec-City, India's only international financial services centre (IFSC), is in the news again. On October 13, Shipfinex received a limited-use authorisation from the International Financial Services Centres Authority (IFSCA) to begin tokenising maritime assets there.

While the money flowing through is real, a financial centre is also judged by its people, markets and depth. And on those counts, the picture is mixed.

The idea behind GIFT City was to bring home the financial business that Indians did in Singapore, Dubai, Mauritius and London. The IFSC was pitched as a first step towards bringing financial transactions relating to India back to Indian shores, and IFSC units are treated as non-residents under foreign exchange rules, which lets them deal freely in foreign currency.

In 2007, the plan was grand.

It envisaged three phases over 15–20 years, a cost of about ₹702.70 billion, and 500,000 direct and indirect jobs.

Gujarat invested ₹325 million of equity, matched by IL&FS, and gave 662 acres of land to the project. Infrastructure was to be funded from sales of development rights to private players. In 2020, IL&FS sold its stake to the state government for ₹320 million.

The larger public cost is the revenue forgone through tax concessions. Units get a 100% deduction on eligible business income for 20 of 25 years, up from 10 of 15. On registrations and capital, the numbers look strong. IFSCA granted 1,193 registrations by March 2026, up from 110 five years earlier, but only 652 - 487 domestic and 165 foreign – were active. The gap between registered and active units is worth noting.

Numbers Speak
Banking units rose from 15 to 37 over the period, and fund management entities from zero to 217. In the period of April to June 2026, banking assets reached $120.69 billion, fund commitments $45.08 billion, and IFSC exchange traded value $317 billion.

By August 31, 2026, in all, 20 banking units had sanctioned $54.02 billion under the RBI's FCNR(B) swap facility, and had disbursed $11.62 billion in external commercial borrowings since April. NRI investment in GIFT City funds surpassed $7 billion by March 2025, and aviation leasing carved out a niche, with more than 250 aircraft leased through the IFSC.

Jobs, however, tell a different story. Official numbers put employment at about 24,000, which is under 5% of the 500,000 direct-job promise.

Tax Uncertainties
All, though, is not well, as many fund houses are moving their funds out from GIFT City. Recently, Artha Bharat Investment Managers, which runs more than $800 million from GIFT City, is shifting two of its funds to Abu Dhabi Global Market. The firm said the move was due to tax uncertainty, compliance demands and restrictions on investors.

At the heart of the fund house’s decision is the absence of a reliable tax shield at the fund level. Most leading fund centres tax investors rather than the fund, but in GIFT City, a fund that pools resident and non-resident money forfeits its specified status and becomes taxable at the fund level. In practice, that bars such funds from accepting capital from resident Indians.

Doubts over how deductions are applied add to the unease.

The remedy lies with policy makers: what is needed is clear, binding guidance on which funds qualify for relief, and ease the mixed-investor rule so that tax treatment is predictable and competitive with rival centres. Simpler compliance would also help.

The setback is modest, since the Artha Bharat’s other funds will stay in GIFT City, but it is a reminder that certainty on tax matters as much as the incentives themselves in keeping the funds at home.

The Big Picture
GDP, FDI and FII are harder to pin down, because there is no official, audited figure for GIFT City's share of GDP. One widely repeated claim, attributed to the National Institute of Financial Management, is that it could add up to 1% to GDP, but that is a potential and not a measured contribution. There is yet no published split of FDI and FII flowing into the zone. Because IFSC units are treated as non-residents, much of their activity is offshore-style business, which doesn't show up as conventional FDI or portfolio investment. The honest position is that the centre's financial footprint is large, but its contribution to the wider economy has not been formally measured.

So, has the GIFT City met its purpose? Partly. As a booking centre for foreign-currency lending, funds and leasing, it works, and many banks that once handled India-linked financing from Singapore or Mauritius now operate through IFSC units. As an integrated city with a deep talent pool and liquid markets, not so much.

Several factors explain why it falls short. The first is talent and lifestyle. Reports describe high staff turnover, limited social infrastructure and high housing costs. One analysis also argued the project was planned like a factory zone, with the ecosystem expected to follow. A services hub needs amenities first.

Secondly, growth has been tax-led. Analysts say long-term success depends on social infrastructure and on diversifying beyond derivative trading. Third, capital controls limit its openness. GIFT cannot fully escape India's broader policy constraints, and the RBI has been worried that loose controls could turn it into a tax haven. Fourth, the tax clock is ticking, since several concessions require operations to begin by March 31, 2030. Finally, there is the matter of age. Singapore and Dubai each took at least two decades to mature, and GIFT City is still young.

Looking Forward 
Making GIFT City more impactful starts with building the city, not just the district. Housing, schools, healthcare and transport need to come before the next wave of tower approvals. The product mix also needs to broaden beyond derivatives into asset management, insurance, trade finance, green and transition finance, and direct listings. Investors need certainty, which means clarifying or extending tax timelines beyond 2030, and fixing the GST ambiguities that IFSC units face. Market liquidity can be deepened by merging or strengthening the exchanges, and attracting more foreign brokers and institutional flows. The authorities should also publish yearly data on jobs, forgone tax, FDI and portfolio flows, and contribution to services exports, so that success can be measured and not just claimed. Finally, local training in finance and fintech would spare firms from relocating staff from other cities.

GIFT City has won the capital race, but is still behind on people. It is a useful piece of financial plumbing that has not yet become a financial capital. Its next five years will depend less on new tax breaks, and more on whether professionals want to live there.

*Views are personal.