India Deepens Foreign Investor Access to $639 Billion Credit Market via GIFT City: Report
In a major reform aimed at boosting global participation, India has streamlined access for foreign investors into its burgeoning $639 billion corporate bond market through its flagship financial hub—Gujarat International Finance Tec-City (GIFT City).
The move is set to unlock more foreign capital into India’s bond markets, potentially increasing long-term capital flow and enhancing market liquidity.
Why It Matters
This decision follows consistent demands from global institutional investors for simplified processes and tax-neutral frameworks to invest in Indian debt instruments. GIFT City, with its International Financial Services Centre (IFSC) and relaxed regulatory norms, is now emerging as the gateway for such capital inflows.
According to sources, the Reserve Bank of India (RBI) and the International Financial Services Centres Authority (IFSCA) are working in tandem to create a level playing field, allowing easier entry for international asset managers and funds.
Key Highlights
Regulatory Clarity: Investors via GIFT City can bypass several legacy regulatory bottlenecks faced in traditional routes.
Incentivized Tax Regime: Zero capital gains tax on specific bonds and minimal withholding taxes make GIFT City more attractive.
Growing Infrastructure: GIFT City now houses over 400 entities including major global banks, fund houses, and fintechs.
Unified Access: All operations—including settlements, clearing, and custodian services—are seamlessly integrated.
Impact on the Indian Economy
This policy reform is poised to provide Indian corporates with a wider investor base for fundraising, which is crucial as infrastructure and industrial sectors demand more credit. It also adds credibility to India’s ambition of turning GIFT City into a global financial powerhouse.
Vizzve Finance Impact
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FAQ
Q1: What is GIFT City and why is it important for foreign investors?
A: GIFT City (Gujarat International Finance Tec-City) is India’s first IFSC offering regulatory, tax, and operational benefits to foreign investors looking to invest in Indian markets.
Q2: What reforms have been introduced recently?
A: India has streamlined bond market access for foreign investors through GIFT City, offering simplified rules, tax incentives, and faster processing.
Q3: How big is India’s corporate bond market?
A: India’s credit or corporate bond market is valued at approximately $639 billion and growing, with increasing participation from both domestic and global investors.
Q4: How does this benefit Indian companies?
A: Broader access to global capital reduces borrowing costs and increases funding options, especially for long-term infrastructure and industrial projects.
Q5: Will this make India a global financial hub?
A: The strategic reforms and international participation through GIFT City are aligned with India's vision to develop a global financial center comparable to Singapore or Dubai.
Published on:July 11,2025
Published by :Selvi
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