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On August 12, 2025, the Union Cabinet approved four new semiconductor manufacturing projects under the India Semiconductor Mission (ISM). These facilities will be set up in Odisha, Punjab, and Andhra Pradesh, marking a major step toward strengthening India’s semiconductor ecosystem. The newly approved plants are intended to bring advanced chip fabrication and packaging capabilities to different regions of the country. This geographic distribution of investments highlights the government’s focus on balanced regional growth, while also advancing India’s vision of creating a resilient semiconductor supply chain. The four projects, proposed by SiCSem, Continental Device India Private Limited (CDIL), 3D Glass Solutions Inc., and Advanced System in Package (ASIP) Technologies, together involve an investment of around ₹4,600 crore. They are projected to create jobs for 2,034 skilled professionals, while boosting the broader electronics manufacturing ecosystem and generating numerous indirect job1 opportunities. Industry Focus of the Approved Proposals The newly sanctioned semiconductor projects are designed to strengthen India’s expertise in chip fabrication, advanced packaging, and discrete device production, addressing key gaps in the nation’s electronics ecosystem. In line with the India Semiconductor Mission, these initiatives aim to reduce import reliance, build supply chain resilience, and encourage technology transfer through international collaborations. Alongside advancing priority industries such as automotive, renewable energy, defence, and consumer electronics, the projects are expected to generate high-value jobs, support ancillary sectors, and contribute to India’s economic growth by positioning the country as a competitive force in the global semiconductor industry. Odisha: In Bhubaneswar, SiCSem Private Limited, in partnership with UK-based Clas-SiC Wafer Fab Ltd., will establish India’s first commercial Silicon Carbide (SiC) compound semiconductor fabrication plant with a capacity of 60,000 wafers and 96 million packaged units per year. The facility will serve advanced applications in automotive, renewable energy, and industrial electronics. Additionally, 3D Glass Solutions Inc. will set up a state-of-the-art packaging and embedded glass substrate facility in Info Valley, deploying technologies like glass interposers, silicon bridges, and 3D Heterogeneous Integration (3DHI) modules. With annual capacity of nearly 70,000 glass panel substrates, 50 million assembled units, and 13,000 3DHI modules, this unit will support sectors such as defence, AI, high-performance computing, RF, photonics, and automotive electronics. Andhra Pradesh: Advanced System in Package (ASIP) Technologies, in collaboration with South Korea’s APACT Co. Ltd., will set up a semiconductor facility with an annual output of 96 million units. Its products will target fast-growing markets like mobile devices, set-top boxes, automotive electronics, and consumer electronics. Punjab: In Mohali, Continental Device India Private Limited (CDIL) will scale up its discrete semiconductor facility to produce high-power components such as MOSFETs, IGBTs, Schottky diodes, and transistors in both silicon and silicon carbide. With a capacity for 158 million units annually, the facility will directly serve EVs, charging infrastructure, renewable energy, power conversion, industrial electronics, and communications. Together, these projects mark a major boost to India’s semiconductor landscape, featuring the country’s first compound semiconductor fabrication plant and an advanced glass-based packaging unit. They complement India’s fast-growing, government-backed chip design ecosystem, ensuring stronger integration into global supply chains. Foundation of India’s Semiconductor Growth: Past Project Approvals With these recent approvals, the overall number of sanctioned initiatives under the India Chipmaking Mission has increased to 10, attracting cumulative investments of around INR 1.60 lakh crore across various regions of the nation. This milestone highlights India’s accelerating journey toward building a robust semiconductor ecosystem, bolstering its position in international value chains while advancing innovation, employment, and economic growth within. Date of Approval Company Location Investment Output Capacity June 2023 Micron Technology Sanand, Gujarat ₹22,516 crore ATMP Facility, with phased ramp-up. February 2024 Tata Electronics (TEPL) in partnership with Powerchip Semiconductor Manufacturing Corp (PSMC) of Taiwan Dholera, Gujarat   ~₹91,000 crore 50,000 wafers/month February 2024 CG Power & Industrial Pvt Ltd in partnership with Renesas & Stars Sanand, Gujarat ~₹7,600 crore 15 million chips/day February 2024 Tata Semiconductor Assembly and Test Pvt Ltd Morigaon, Assam ₹27,000 crore 48 million chips/day September 2024 Kaynes Semicon Pvt Ltd Sanand, Gujarat ₹3,307 crore 6.33 million chips/day MAY 2025 HCL-Foxconn JV Jewar, Uttar Pradesh ₹3,700 crore 20,000 wafers/month August 2025 SicSem Private Limited Bhubaneshwar, Odisha ₹2,066 crore 60,000 wafers/year August 2025 3D Glass Solutions Inc. Bhubaneshwar, Odisha ₹1,943 Cr 70,000 Glass panels/year August 2025 CDIL (Continental Device) Mohali, Punjab ₹117 Cr 158 million units /year August 2025 ASIP (Advanced System in Package Technologies) Andhra Pradesh ₹468 Cr 96 million units /year Government Initiatives to Boost Semiconductor Design and Skilled Workforce India has offered significant design resources and support to numerous academic institutions alongside 72 start-ups, encouraging innovation and developing the next wave of semiconductor professionals. In July this year, the Electronics and Information Technology (MeitY) approved multiple chip design initiatives from startups, small firms, and educational institutions, targeting uses such as security systems, smart devices, networking equipment, plus microprocessor IP solutions. Progress under this initiative has already been notable: several startups have obtained venture capital, while companies have finalised prototype tape-outs through international foundries, and institutions have built 20 chip models at the Semiconductor Laboratory in Mohali, Punjab. Supported by a budgeted outlay of INR 8.03 billion, this scheme provides nearly 50 percent expense coverage for designing and prototyping (limited at INR 150 million) and performance-based incentives of roughly 4-6 percent on net sales over five years (restricted at INR 300 million). Altogether, these measures are laying a solid foundation for skilled workforce development plus a self-reliant design ecosystem, vital towards sustaining India’s future semiconductor ambitions. Conclusion In summary, the India Semiconductor Mission (ISM) has quickly emerged as a key pillar of the country’s technology agenda, with 10 sanctioned projects drawing investments of over INR 1.60 trillion and covering vital domains such as fabrication, packaging, and discrete device production. Alongside these industrial achievements, government-supported programs in chip design, prototyping, and talent development are building a strong innovation pipeline across academia and startups. Collectively, these initiatives are not only reducing import dependence and reinforcing supply chain resilience but also positioning India as a rising hub in the global semiconductor ecosystem, driving long-term economic growth, … Read more

Background In 2022, the Reserve Bank of India (RBI) permitted foreign banks to open Special Rupee Vostro Accounts (SRVAs) to enable trade settlements in Indian Rupees (INR). This move was part of a broader strategy to promote the “internationalisation” of the rupee. What is an SRVA? A Special Rupee Vostro Account (SRVA) is a rupee-based account maintained with an Authorised Dealer (AD) Category-I bank in India on behalf of a foreign bank or entity. It allows international entities to carry out trade transactions directly in Indian Rupees. Regulatory Compliances According to RBI guidelines, SRVAs operate under the Foreign Exchange Management Act (FEMA) and are subject to Know Your Customer (KYC) requirements. Earlier, Indian AD Category-I banks had to obtain prior approval from the RBI before opening SRVAs for overseas correspondent banks. Treatment of Surplus Funds Previously, if surplus balances accumulated in SRVAs, foreign banks needed to register as Foreign Portfolio Investors (FPIs) with the Securities and Exchange Board of India (SEBI) in order to invest these funds in Indian capital markets. Development: RBI’s Announcement On 05 August 2025, the RBI announced that AD Category-I Banks can now open SRVAs for overseas banks without seeking prior approval, while all other regulatory norms remain applicable. Further, on 12 August 2025, the RBI allowed SRVA holders to invest surplus rupee balances in Central Government Securities (G-secs), including Treasury Bills (T-Bills), within specified limits. The guidelines mandate that proceeds from matured securities and any interest earned be credited back to the same SRVA, ensuring the funds stay available for trade settlements or reinvestments. Key benefits of the development SRVA holders can now deploy their surplus balances more effectively by investing in risk-free G-secs and Treasury Bills, thereby earning returns. The step supports the rupee’s global reach by enabling foreign entities to access India’s government securities market without needing FPI registration. It encourages cross-border trade settlements in Indian rupees, reducing reliance on the US dollar and cutting foreign exchange transaction costs. How India–UAE trade relations can benefit By promoting the use of the rupee in cross-border trade and simplifying the settlement mechanism, this step will boost efficiency and reinforce the resilience of the India–UAE trade corridor, bringing advantages to businesses on both sides. Conducting oil trade with the UAE directly in rupees, without relying on a third-party currency like the dollar, will also align with India’s wider strategy and strengthen its energy trade ties with countries such as Russia. For businesses looking to establish and expand their presence in such evolving trade environments, partnering with a Company Registration consultant in India can ensure smooth market entry and regulatory compliance.   

Introduction: Relations between India and China seem to be improving following the trip of Chinese Foreign Minister Wang Yi to New Delhi, where he jointly co-chaired the 24th round of the Special Representatives’ meeting with India’s National Security Advisor Ajit Doval. The visit resulted in a series of steps aimed at easing tensions and restoring trust after more than five years of strained relations. Among the most notable actions were the decision to reopen border trade routes and boost cross-border investment flows, creating fresh opportunities for businesses on both sides. Discussions are additionally progressing to resume border commerce in locally produced goods, signaling a positive development in bilateral ties. Both sides have suggested reopening designated trade points along their shared border. This could give access to cost-effective goods, enable businesses to leverage shared manufacturing capabilities, and broaden market opportunities for producers on both sides. India’s participation in the Shanghai Cooperation Summit The Shanghai Cooperation Council is a two-day gathering that brought together more than 20 leaders from non-Western countries, serving as a platform to highlight China’s goal of shaping a new global security and economic framework. Prime Minister Narendra Modi attended the recently finished Shanghai Cooperation Organisation (SCO) meeting in China, marking his first trip to the country in seven years. On the sidelines of the summit, he engaged in a bilateral discussion with President Xi Jinping, offering a valuable opportunity to further dialogue and cooperation between the two countries. At the summit, Prime Minister Modi stressed regional stability, security, and sustainable development, framing India’s SCO plan around Security, Connectivity, and Opportunity. He underlined that peace and conversation are vital for prosperity and for building more constructive India-China ties. On August 31, Modi and President Xi emphasized that India and China should collaborate on development rather than competing. Improved relations could enhance trade, attract investment, and increase confidence, benefiting India’s infrastructure, technology, and manufacturing sectors while giving China greater entry to India’s fast-growing consumer market. The Tianjin Declaration of the SCO Council further emphasised commitments to bolster cooperation in artificial intelligence, reaffirming that all countries have equal rights to develop and utilise AI. Such collaboration could accelerate the development of more advanced and cost-effective AI models, facilitating broader adoption across key sectors like healthcare, logistics, finance, and manufacturing. This, in turn, may help lower operational costs, boost productivity, and create new investment opportunities, supporting sustainable growth among member states. Supporting this vision, President Xi pledged that China will continue to share the opportunities of its vast market and implement its action plan for high-quality economic and trade cooperation within the SCO framework. For India, this offers an opportunity to expand bilateral economic ties by aligning on trade and development initiatives under the SCO umbrella. Enhanced cooperation in areas such as market access, supply chain integration, and cross-border investment could strengthen engagement, further consolidating the positive momentum in India–China relations.  Top outcome of the Special Representatives’ and SCO summit dialogue: Both sides agreed to maintain engagement through diplomatic and military channels. Prime Minister Modi emphasised the importance of a fair, reasonable, and mutually acceptable resolution to the boundary issue, highlighting dialogue and peaceful negotiations. Prime Minister Modi welcomed the progress made since his last meeting with President Xi in 2024, noting constructive steps in bilateral engagement. India expressed its readiness to work constructively with China, signalling a willingness to expand cooperation. India and China agreed to resume direct passenger flights and update the Air Services Agreement, simplifying visa procedures to promote trade, tourism, and broader cross-border interaction. Discussions included plans to revive trade through key border passes such as Lipulekh, Shipki La, and Nathu La, potentially enhancing economic opportunities and improving local connectivity. At the SCO Summit, both leaders reaffirmed that India and China should be seen as development partners rather than rivals, signaling a commitment to closer collaboration. The Tianjin Declaration of the SCO Council reaffirmed commitments to strengthen cooperation in artificial intelligence, with significant potential to reduce costs, boost innovation, and generate new investment opportunities across member states. President Xi pledged that China would share the opportunities of its vast market and pursue high-quality development of economic and trade cooperation within the SCO framework, creating fresh avenues for bilateral economic engagement with India. The summit highlighted three key pillars of India’s engagement within the SCO framework -Security, Connectivity, and Opportunity, underscoring peace and regional stability as essential for sustainable prosperity. Focus on the border and bilateral co-operation. During his two-day visit to New Delhi, Chinese Foreign Minister Wang Yi highlighted that India and China should view each other as partners. This visit marked only the second high-level engagement between the two nations since 2020, emphasising its importance in ongoing efforts to rebuild and strengthen bilateral relations. Wang Yi held talks with India’s External Affairs Minister S. Jaishankar on August 18, 2025, and was scheduled to meet Prime Minister Modi on August 19. He remarked that India-China bilateral relations are progressing on a “positive trend” toward deeper cooperation. The visit also yielded concrete outcomes, with Wang assuring that China would resume supplying critical commodities to India, including fertilisers, rare earth minerals, and tunnel boring machines (TBMs), which are vital for India’s agriculture and infrastructure development. Global attention on India-China engagement An improvement in India-China relations holds considerable global significance, given the economic and strategic weight of both countries. As Asia’s largest emerging economies and key players in multilateral platforms like BRICS, closer cooperation between India and China could bolster regional stability, open new opportunities for trade and investment, and enhance joint efforts to tackle global challenges such as climate change, supply chain resilience, and sustainable development. India-China trade activities over the year India-China trade has steadily increased over the years, though the trade balance has continued to favour China, with India heavily dependent on imports of essential goods such as electronics, machinery, and industrial inputs. In FY24, the total value of imports from China reached US$101.74 billion. India-China Trade Relation Year-on-Year (Values in USD Billion) Trade Activities 2020-2021 2021-2022 … Read more

Introduction Prime Minister Narendra Modi’s recent visit to Tokyo marked a new phase in India–Japan relations. The two-day visit occurred at the invitation of Japanese Prime Minister Shigeru Ishiba. As part of efforts to strengthen the next-generation economic partnership, Japan placed greater emphasis on supporting green energy initiatives in India, a move that helps reduce India’s reliance on imported oil and coal and brings the country closer to its 500GW renewable energy target by 2030. During the summit, both Prime Ministers welcomed the continuation of high-level exchanges, including ministerial and parliamentary interactions, which underscored the mutual trust and depth of the India–Japan relationship over the years. Over the last decade, the partnership has grown substantially across multiple sectors, including security, defence, trade, investment, commerce, science and technology, skills development, mobility, as well as cultural and people-to-people ties. The Prime Ministers also highlighted that India and Japan have set up more than seventy dialogue mechanisms and working groups, facilitating ongoing collaboration across various ministries and agencies. This sustained engagement has led to increased mutual investments, improved technology transfer, and stronger integration into global supply chains. India’s participation at the 15th India-Japan Annual Summit At the recently concluded 15th India-Japan Annual Summit, both Prime Ministers emphasised enhancing strategic, economic, and technological cooperation. A key highlight was the announcement of the India-Japan Economic Security Initiative, aimed at strengthening bilateral collaboration in economic security, securing and reinforcing supply chains for critical goods, and advancing cooperation in emerging and strategic technologies. Priority sectors include telecommunications, pharmaceuticals, critical minerals, semiconductors, and clean energy. The Prime Ministers welcomed the launch of the Dialogue on Economic Security, covering Strategic Trade and Technology, and directed their respective Foreign Ministries to expedite policy-level exchanges to identify concrete projects and outcomes in strategic sectors, in partnership with industry and academia. Both sides also agreed to safeguard high-technology trade while jointly addressing export control challenges. Over time, this collaboration is expected to attract foreign investment to India, foster innovation in emerging industries, and strengthen India’s role as a dependable partner in global high-tech trade and industrial supply chains. To highlight ongoing cooperation, an Economic Security Factsheet was released, showcasing projects in strategic sectors. Initiatives promoting business-to-business collaboration were endorsed to encourage Indian and Japanese companies to diversify and strengthen supply chains. Additionally, the signing of a Memorandum of Cooperation in the Field of Mineral Resources is set to enhance partnership in critical minerals and create expanded business opportunities. Strengthening partnership India-Japan relations have consistently gone beyond commercial ties. Over the years, the partnership has spanned major infrastructure projects, including the Mumbai-Ahmedabad bullet train, defence cooperation in the Indo-Pacific region, and close coordination in multilateral forums. These initiatives highlight the enduring positive and strategic relationship that India has fostered with Japan. The recently concluded summit, along with Japan’s pledge of ₹6 lakh crore as an investment target in India, underscores the shared commitment to deepening the bilateral relationship. This substantial investment is expected to enhance economic cooperation, facilitate technology transfer, and broaden collaboration in strategic sectors such as infrastructure, clean energy, and emerging technologies. Through this significant commitment, Japan demonstrates its confidence in India’s growth potential while strengthening the long-term partnership and mutual prosperity between the two countries. Strengthened Ties: Key Results of the India–Japan Summit India–Japan Joint Vision for the Next Decade: India and Japan have outlined a 10-year strategic vision to enhance bilateral cooperation across eight key areas: economic partnership, economic security, mobility, sustainability, technology, health, people-to-people ties, and state-prefecture collaboration. The initiative aims to boost trade, investment, sustainable growth, innovation, talent mobility, and cultural exchange, reflecting both countries’ commitment to shared security and long-term prosperity. Action Plan for India–Japan Human Resource Exchange: India and Japan agreed on a plan to facilitate the exchange of 500,000 people over five years, including 50,000 skilled and semi-skilled Indian workers moving to Japan. This initiative addresses Japan’s workforce requirements while offering Indian professionals global exposure, skill development, and stronger bilateral connections. Memorandum of Cooperation on Joint Crediting Mechanism (JCM): India and Japan signed an MoC on the JCM to accelerate the deployment of decarbonising technologies, products, systems, and infrastructure. The initiative supports India’s greenhouse gas reduction targets while promoting sustainable development. MoU on India–Japan Digital Partnership 2.0: India and Japan inked an MoU to advance cooperation in the digital sector. The agreement focuses on strengthening digital public infrastructure, developing digital talent, and promoting joint R&D in emerging technologies such as artificial intelligence, the Internet of Things, and semiconductors. Memorandum of Cooperation in Mineral Resources: India and Japan signed an MoC to enhance supply chain resilience in critical minerals. The agreement includes collaboration on advanced processing technologies, joint investments in exploration and mining, and coordinated efforts for stockpiling essential minerals. Private Investment Target of JPY 10 Trillion: Japan pledged to mobilise JPY 10 trillion (₹6 lakh crore) in private investment in India over the next decade, focusing on infrastructure, manufacturing, technology, clean energy, and innovation. This investment is expected to drive growth, generate employment, strengthen supply chains, facilitate technology transfer, and expand bilateral trade. India–Japan Economic Security Initiative: India and Japan launched the Economic Security Initiative to enhance supply chain resilience in strategic sectors such as semiconductors, clean energy, telecommunications, pharmaceuticals, critical minerals, and other emerging technologies. An Economic Security Fact Sheet was issued highlighting ongoing cooperation. The initiative aims to strengthen India’s access to critical technologies, attract Japanese investment, diversify supply chains, and boost India’s economic security and global technological competitiveness. Sector Impact of the 15th India-Japan Annual Summit Semiconductors: Building on the existing CEPA framework, India and Japan have deepened their collaboration in the semiconductor sector. In July 2023, India’s Ministry of Electronics and Information Technology (MeitY) and Japan’s Ministry of Economy, Trade, and Industry signed a Memorandum of Cooperation under the India-Japan Semiconductor Supply Chain Partnership to strengthen supply chain resilience. The recent summit further highlighted the strategic importance of semiconductor cooperation, with leaders from both countries advancing collaboration in semiconductors, artificial intelligence, robotics, green energy, and space technologies. Green Energy: … Read more

In India, companies can issue a variety of investment instruments to investors to meet their capital requirements. Under Indian company law, such instruments issued to investors are called ‘securities’. Depending on a company’s financial needs and investor preferences, several fundraising options are available for consideration. Fundraising Instruments: At the time of raising capital, companies commonly issue equity instruments, debt instruments, or hybrid instruments that combine the features of both debt and equity. The key difference between issuing equity and debt instruments lies in whether the shareholding of existing investors becomes diluted. Types of Fundraising Instruments: Equity: Companies can raise funds through equity financing without creating debt, allowing investors to hold a share of the ownership of the company CCPS (Compulsory Convertible Preference Shares): Compulsory Convertible Preference Shares operate as hybrid or anti-dilution instruments, combining fixed dividends with the potential for conversion into equity. Conversion of the instrument may depend on the performance of the company, which benefits investors by allowing flexibility in conversion of the instrument. If targets are not specified, the company can increase its stake. RPS (Redeemable Preference Shares): Redeemable Preference Shares have a fixed tenure and allow companies to raise temporary capital, giving flexibility in financial planning. OCRPS (Optional Convertible Redeemable Preference Shares): Optional Convertible Redeemable Preference Shares provide flexibility by allowing conversion into equity or repayment based on mutual agreement. This structure benefits both investors and companies by aligning with performance or shared preferences. CCD (Compulsorily Convertible Debentures): CCDs, like Compulsorily Convertible Debentures, are hybrid instruments that convert into equity within a specified period. Until conversion, they function as debt, providing companies with structured fundraising opportunities. NCD (Non-Convertible Debentures): Non-Convertible Debentures are debt instruments preferred by investors seeking fixed returns. They include interest and principal repayment but do not convert into equity. OCD (Optionally Convertible Debentures): Optionally Convertible Debentures allow debentures to be converted into equity or repaid under agreed terms. This structure offers flexibility while combining elements of debt financing. Employees Stock Option Plans (ESOPs): Employees Stock Option Plan grant employees the right to purchase company shares at a pre-determined price on a predetermined date. Companies use ESOPs as tools to attract and retain skilled employees, while also aligning employee interests with company success. Sweat Equity Shares: Companies issue sweat equity shares to founders, directors, or employees at discounted prices or for non-cash consideration, recognising their contributions. By issuing such shares, companies retain and reward employees for their services. Compliances for Issuance of the Financial Instruments: Companies may issue equity shares to existing shareholders through rights issuance after securing board approval. Following approval, offer letters must be sent to shareholders detailing the rights issue period. The board resolution also needs to be filed with the Registrar of Companies. Once funds are received, the board approves the allotment of the equity shares to the shareholders, and the return of allotment must be filed by the company with the Registrar of Companies. Funds received from the right issue cannot be used until the share allotment takes place and the return is filed with the Registrar. For preferential offers made to new investors, the process involves: Obtaining a valuation report from a registered valuer. Gaining approval from the board of directors for the preferential issue. Securing shareholder approval through a special resolution. Opening a separate bank account where investors remit funds. Filing the special resolution with the Registrar of Companies. Sending offer letters to investors. Allotting shares once funds are received, and filing the return of allotment. Utilising funds only after the return of allotment is filed. If equity or preference shares are issued, corporate actions must be filed with depository participants to credit instruments to investor demat accounts. For CCDs or OCDs, share certificates may be issued. For ESOPs, the compliance process includes: Board approval for issuing ESOPs. Shareholder approval through a special resolution. Filing the resolution with the Registrar of Companies. Updating the Register of Employee Stock Options. Granting options to employees. Vesting and subsequent exercise of options. Allotting shares once options are exercised and filing the return of allotment. Filing corporate actions with depositories for crediting instruments to investor demat accounts. Including necessary disclosures in the board’s report. For Sweat Equity Shares, the process requires: Obtaining a valuation report from a registered valuer. Securing board approval. Securing shareholder approval through a special resolution. Filing the resolution with the Registrar of Companies. Allotting shares after approval and filing the return of allotment. Recording entries in the Register of Sweat Equity Shares. Making disclosures in the board’s report during the year of issue. For Non-Convertible Debentures, companies may issue only secured NCDs. If unsecured NCDs are issued, listing on a recognised stock exchange becomes mandatory to prevent classification as deposits. For secured Non-Convertible Debentures, the company must ensure: Redemption does not exceed 10 years, except in infrastructure-related sectors where redemption can extend to 30 years. NCDs are secured by creating a charge equal to the value of repayment of principal and interest. Appointment of a debenture trustee with defined roles and qualifications. Creation of a Debenture Redemption Reserve (DRR) by 30th April. This reserve must equal 15% of debentures maturing in the following financial year. The amount may be invested in scheduled banks or government securities and used only for redemption. If instruments are issued to non-resident investors, FEMA compliance becomes mandatory. Companies must check sectoral caps, acquisition rules, and pricing guidelines. Once met, companies must file Form FC-GPR within 30 days of issuing instruments to non-residents. Subscription of Non-Convertible Debentures by foreign investors other than FPIs is treated as External Commercial Borrowing (ECB) under FEMA rules. External Commercial Borrowings (ECB): Indian entities can raise ECBs as commercial loans in foreign currency from non-resident lenders. ECBs are allowed only for defined periods, known as the Minimum Average Maturity Period. Key Takeaway for Preference/Equity/OCD/CCD/Sweat Equity For the rights issuance of equity shares, board approval alone is required. Conclusion: The complexity of financial instruments makes customised strategies essential for effective capital raising and ownership management. To handle this … Read more

On April 26, 2025, India introduced guidelines and an online portal for the Electronics Component Manufacturing Scheme (ECMS). Valued at INR 229.19 billion (US$2.7 billion), this initiative is designed to make India Atmanirbhar (self-reliant) in the electronics supply chain. The scheme focuses on building a strong component ecosystem by attracting significant global and domestic investments, enhancing manufacturing capacity and capabilities, and integrating Indian companies into Global Value Chains (GVCs). What Is India’s ECMS Scheme? India launched the Electronics Component Manufacturing Scheme (ECMS) on April 8 this year to strengthen the country’s electronics ecosystem. The scheme carries an outlay of INR 229.19 billion (US$2.58 billion) and runs for six years, with an optional one-year gestation period. The government opened the application window on May 1. By October 27, the Centre had received 249 applications, reflecting investment commitments worth INR 1.15 trillion (US$12.99 billion). This strong response highlights the industry’s confidence in India’s push to expand its electronics manufacturing capabilities. The ECMS scheme aims to achieve the following: Building a self-reliant and globally competitive electronics component ecosystem: The scheme encourages companies to produce critical components in India, reducing reliance on imports and strengthening supply chain resilience. Attracting domestic and foreign investment across the component value chain: It offers incentives that make India an attractive destination for global and local investors in electronics manufacturing. Increasing domestic value addition in electronics manufacturing: The scheme promotes production of high-value components, enabling deeper value addition within the country. Enhancing India’s participation in global value chains: ECMS supports the integration of Indian manufacturers into global supply networks, positioning India as a key player in the electronics sector. Target Segment Categories under the Scheme include: Sr No Target segment A Sub-assemblies Display module sub-assembly Camera module sub-assembly B Bare components Non-SMD passive component Electro-mechanicals Multi-layer Printed Circuit Board (PCB) Li-ion Cells for digital application (excluding storage and mobility) Enclosures for mobile, IT Hardware products and related devices C Selected bare components High Density Interconnect (HDI)/ Modified semi-additive process (MSAP)/ Flexible PCB SMD passive Components D Supply chain ecosystem and Capital equipment Supply chain of sub-assemblies (A) & bare components (B) & (C) Capital goods used in electronics manufacturing including their sub-assemblies and components Time Period The ECMS will operate from FY 2025–26 to FY 2031–32, including a one-year gestation period. It aims to develop a complete supply chain for electronics manufacturing, boost domestic value addition, and position Indian companies as competitive players in global electronics markets. Qualification Criteria Applicants must meet the following requirements to be eligible under the ECMS: Both greenfield investments (new operations or facilities established from scratch) and brownfield investments (investments in existing production setups) in the target segment are eligible. Separate applications must be submitted for each product within the target segment. Multiple applications for the same product under a single target segment will not be accepted. Eligibility will be based on consolidated global Electronics System Design and Manufacturing (ESDM) revenue or manufacturing revenue, along with technological and financial capability, as specified in the scheme guidelines. Approved Companies and Investment Breakdown Here are the approved companies selected in the first batch of ECMS applications. The list highlights key manufacturers, their proposed investments, and the scale of production they plan to achieve. It also shows where these projects will be set up and how many jobs they are expected to create. This overview gives a quick snapshot of the programme’s early momentum: Applicant name  Product  Project location  Investment  Production  Employees  Kaynes Circuits India Pvt. Ltd.  Multi-layer PCB  Tamil Nadu  INR 1.04 billion (US$11.75 million)  INR 43 billion (US$485 million)  220  Kaynes Circuits India Pvt. Ltd.  Camera module sub-assembly  Tamil Nadu  INR 3.25 billion (US$36.71 million)  INR 126.30 billion (US$1.4 billion)  480  Kaynes Circuits India Pvt. Ltd.  HDI PCB  Tamil Nadu  INR 16.84 billion (US$190 million)  INR 45.10 billion (US$509 million)  1,480  Kaynes Circuits India Pvt. Ltd.  Laminate  Tamil Nadu  INR 11.67 billion (US$131.8 million)  INR 68.75 billion (US$776 million)  300  SRF Limited  Polypropylene film  Madhya Pradesh  INR 4.96 billion (US$56 million)  INR 13.11 billion (US$148.12 million)  225  Syrma Strategic Electronics Pvt. Ltd.  Multi-layer PCB  Andhra Pradesh  INR 7.65 billion (US$86 million)  INR 69.33 billion (US$783 million)  955  Ascent Circuits Pvt. Ltd.  Multi-layer PCB  Tamil Nadu  INR 9.91 billion (US$111.9 million)  INR 78.47 billion (US$886.5 million)  1,535  Total  –  –  INR 55.32 billion (US$625.02 million)  INR 444.06 billion (US$5.01 billion)  5,195  Here are the approved companies selected in the first batch of ECMS applications. The list highlights key manufacturers, their proposed investments, and the scale of production they plan to achieve. It also shows where these projects will be set up and how many jobs they are expected to create. This overview gives a quick snapshot of the programme’s early momentum. LIST OF PRODUCTS COVERED UNDER CERTAIN TARGET SEGMENTS TARGET SEGMENTS PRODUCTS COVERED Non-SMD (surface mount device) passive components Resistors, capacitors, ferrites, specialty ceramics, inductors, coils (including inductive coil), etc., for electronic applications Electro-mechanicals Speakers and microphones for ICT products, relays, switches, connectors, heat sinks, antenna, vibrator motors, oscillators, filters, actuators, crystals, sensors (non-semiconductors), transducers, etc., for electronic applications Supply chain of sub-assemblies & bare components Laminate, pre-peg, copper foil, separator, cathode material, anode material, electrolyte, polypropylene film, spray wire, lenses, protective film, glass cover, back light, contrast film, polarizer film, etc., for electronic applications Qualification Criteria Applicants must meet the following conditions: Eligible Investments: Greenfield investment: Establishing new operations such as factories or offices from scratch in India. Brownfield investment: Investment in existing facilities or production arrangements in India. Separate Applications: One application per target segment product. Multiple applications for the same product within a target segment are not allowed. Evaluation Parameters: Consolidated global Electronics System Design and Manufacturing (ESDM) revenue or manufacturing revenue. Technological and financial capability as detailed in the scheme guidelines. LIST OF PRODUCTS COVERED UNDER CERTAIN TARGET SEGMENTS TARGET SEGMENTS PRODUCTS COVERED Non-SMD (surface-mount device) passive components Resistors, capacitors, ferrites, specialty ceramics, inductors, coils (including inductive coil), etc., for electronic applications Electro-mechanicals Speakers and microphones for ICT products, relays, switches, connectors, … Read more

For accounting and taxation purposes, a transfer price emerges when related parties, such as company divisions or a company and its subsidiary, need to report their individual profits. A transfer price is utilised to determine costs when these related parties are required to conduct transactions with each other. Generally, transfer prices do not vary significantly from market prices. A transfer price is a price that represents the value of goods or services exchanged between independently operating organisational units. Transfer pricing, on the other hand, refers to transaction prices between associated enterprises that may occur under conditions different from those between independent enterprises. Transfer pricing typically refers to the price at which associated enterprises transfer goods or services. Such transactions can encompass product sales, service provision, money lending, and the use of (intangible) assets. Consequently, transfer pricing effects result in the parent company or a specific subsidiary generating insufficient taxable income or excessive transaction losses. For example, setting high transfer prices can increase profits accruing to the parent by siphoning profits from subsidiaries in high-tax countries, while low transfer prices can move profits to subsidiaries in lower-tax jurisdictions. In simple terms, the prices and conditions set between related parties under transfer pricing policies should align with those that would be agreed upon between independent, unrelated companies. What is the objective of Transfer Pricing? An Associated Enterprise is an enterprise that participates in, or in respect of one or more persons who participate, directly or indirectly, or through one or more intermediaries, in the management, control, or capital of the other enterprise. Arm’s Length Price refers to the price that should have been charged between related parties had those parties not been related to each other. Constituent Entity can be defined as the following: Any entity of the international group that is included in consolidated financial statements for financial reporting purposes or included if the equity share of any entity of the group were to be listed. Or any entity of the group that is excluded from consolidated financial statements based on size or materiality. Or any permanent establishment of an entity of the group if separate financial statements are prepared for financial reporting, regulatory, tax reporting, or internal management control purposes. Part 1: Applicability and Scope of Transfer Pricing 1. Which transactions are subject to transfer pricing regulations? 2. Which transactions are covered under transfer pricing? The following transactions are covered under Transfer Pricing: International Transactions Specified Domestic Transactions • Provision of software development services • IT services • Knowledge process outsourcing services • Provision of intragroup loans • Provision of corporate guarantees • Manufacture and export of auto components • Receipt of low-value intragroup services • Provision of contract R&D services relating to software development or generic pharmaceutical drugs • Supply of electricity • Transmission of electricity • Wheeling of electricity • Purchase of milk or milk products by a co-operative society from its members 3. What are the various types of deemed Associated Enterprise (AE)? In the case of A Ltd., the following entities will be associated enterprises if: A Ltd. holds ≥ 26% voting power in B Ltd. Further, B Ltd. holds ≥ 26% voting power in C Ltd. A Ltd. provides a loan to B Ltd. ≥ 51% of the book value of the total assets of B Ltd. A Ltd. guarantees ≥ 10% of the total borrowings of B Ltd. B Ltd. appoints > 50% of directors/members of the governing board or one or more executive directors of A Ltd. Further, C Ltd. appoints > 50% of directors/members of the governing board or one or more executive directors of B Ltd. Manufacturing of goods of A Ltd. is wholly reliant on intangible assets of B Ltd. B Ltd. supplies > 90% of raw materials to A Ltd. for manufacturing, where the price is influenced by B Ltd. A Ltd. sells goods to B Ltd. at the price decided by B Ltd. A Ltd. and B Ltd have a mutual interest. A Ltd. is controlled by Mr. X/HUF and B Ltd. is controlled by Mr. X/HUF or relatives of Mr. X/HUF. For example,   Part 2: Methods for Computing Arm’s Length Price 1. What are the methods to compute the Arm’s Length Price? The various methods for computing the Arm’s Length Price are as follows: 2. What will be the ALP when more than one price is determined from the methods? Note: If the variation of arm’s length price does not exceed 1% in case of wholesale trading and 3% in other cases, such transfer price will be deemed to be arm’s length price as per Rule 10CA of Income Tax Rules. Wholesale trading refers to the transaction of trading in goods where the purchase cost is 80% or more of the total cost and the average monthly closing inventory is 10% or less of the sale of such goods. Part 3: Documentation and Compliance 1. What is the documentation structure under transfer pricing? 2. What are the documents required to be maintained? Information and documents to be maintained as per Rule 10D of Income Tax Rules Basic Documents Supporting Documents • Details of ownership structure of the enterprise • Profile of the group in which the enterprise is a part • Business overview of the taxpayer and associated enterprises • Details of the transaction (name of the associated enterprise, nature, terms, quantity, value) • Description of functions performed, risk assumed, assets employed • Record of relevant financial forecasts/ estimates made, economic analysis and budgets • Details of the uncontrolled transaction (nature, terms, conditions, analysis to evaluate comparability) • Details of the method selected for determining the arm’s length price • Record of actual working, assumptions, policies for determining arm’s length price • Details of adjustments, if any, made to the transfer price • Government’s publications, reports, databases and studies • Reports of market research studies and technical publications • Price publications including stock exchange and commodity market quotations • Published accounts and financial statements of … Read more

The Foreign Exchange Management Act (FEMA) was enacted by the Government of India in 1999. It substituted the previous Foreign Exchange Regulation Act (FERA) of 1973. The FEMA Act 1973 was formulated to enhance external payments and foreign trade in India. FEMA represents a civil law in contrast to FERA which was a draconian police law. Foreign Exchange Management Act in India represented a modernization of the Indian economy and was established to liberalize and privatize the markets in India. In this article, we’ll provide an overview of the Foreign Exchange Management Act in India, covering the fundamentals that you need to be aware of. What is the FEMA Act? The FEMA Act is the legal framework that governs foreign exchange transactions in India. It lays down the provisions for facilitating external trade and payments while maintaining foreign exchange reserves. The Act covers areas such as foreign direct investment (FDI), overseas investment, remittances, and transactions between residents and non-residents. By simplifying rules compared to its predecessor FERA, the FEMA Act ensures that India’s foreign exchange environment aligns with liberalisation and global economic practices. What is FEMA in India? FEMA in India refers to the Foreign Exchange Management Act, 1999, which regulates cross-border transactions, foreign exchange dealings, and external trade. It was designed to promote orderly development and maintenance of India’s foreign exchange market while facilitating international payments. FEMA also empowers the Reserve Bank of India (RBI) to frame rules and regulations governing foreign exchange, thereby ensuring transparency and compliance in global transactions. What Are The Objectives Of The FEMA Act? The primary aim of introducing the Foreign Exchange Management Act was to liberalize the Indian economy by promoting external trade and payments. It facilitated the regulation of the Indian forex market. According to FEMA, the balance of payment represents a record of transactions involving products, services, or properties between citizens of two separate countries. The Government of India has classified FEMA into two categories: Capital Account Transactions – all capital transactions and the inflow and outflow of money to and from India.  Current Account Transactions – all trade of merchandise as an indicator of an economy’s status. Thus, establishing the structure and measures for all foreign exchange transactions in India. How Is FEMA Applied In India? FEMA applies to the whole of India. It also extends to the agencies and offices located outside India that are managed or owned by an Indian citizen. The headquarters is situated in New Delhi and is known as the Enforcement Directorate. More specifically, the FEMA Act applies to: Indian foreign exchange Indian foreign security Banking, financial, and insurance services Exporting of any product and/or services from India to a foreign country Importing of any product and/or services from outside India Securities as defined under the Public Debt Act of 1994 Buying, Selling, Any Indian Entity owned by a person resident outside India Any citizen of India, residing in India or in a foreign country and the exchange of any kind of product/service Any overseas company owned by a non-resident Indian (NRI) Current Account transactions listed by FEMA have been categorized into three areas: Transactions prohibited by the FEMA Act A transaction that requires Central Government’s permission A transaction that requires the Reserve Bank of India’s (RBI’s) permission What Prohibitions Are Made Under the FEMA Act In India? Sending money which is the result of winning the lottery. Sending money which is the result of winning horse racing, cricket games, etc. Sending money to buy a lottery ticket, football betting, sweepstakes, banned publications, etc. The payment of commission on exports towards equity investment of Indian companies in joint ventures or wholly-owned subsidiaries abroad. The sending of a dividend by any company. This is only applicable if dividend balancing is applicable. The payment of commission on exports under the Rupees State Credit Routes (except commission up to 10 percent of the invoice value of export of tea and tobacco). Any payment regarding “Call-back Services” of telephones. Any travel to Bhutan and/or Nepal. Sending interest income on funds held in Non-resident Special Rupees (NRSR) scheme account. A transaction of any kind with a resident of Bhutan or Nepal. What Are The Rules Of Trade For Foreign Exchange Management Act (FEMA) In India? According to the RBI, foreign exchange can be undertaken with any authorized dealer via the Prior Approval Route or General Permission Route. Scenario Limitations Visiting privately to any country (except Bhutan and Nepal) Liberalized Remittance Scheme (LRS) limit of USD 2,50,000/- per year. Personal donations/gifts by resident individuals Liberalized Remittance Scheme (LRS) limit of USD 2,50,000/- per year. Corporate Donations by persons other than resident individual One per cent of the forex earnings during the preceding three financial years.<br>OR<br>US$ 5,000,000, whichever is less, for a specified purpose. Leaving India for the purposes of gainful employment Liberalized Remittance Scheme (LRS) limit of USD 2,50,000/- per year. Payment for emigration Liberalized Remittance Scheme (LRS) limit of USD 2,50,000/- per year. Payment for the care of relatives (only close relatives) outside of India by a person who is resident but not permanently resident in India The salary (after deducting income tax, Provident Fund, and other deductions) of a person not being a permanent resident in India and a citizen of a foreign state other than Pakistan.<br>OR<br>US$2,50,000/- a year per recipient in all other cases. Business travel abroad US$250,000 per year. Attending a training course or conference US$250,000 per year. For overseas medical treatment US$250,000 per year. The care of a patient going for a medical check-up or medical treatment abroad. US$250,000 per year. The care of a patient going for a medical check-up or medical treatment abroad. US$250,000 per year. Studying abroad US$250,000 per academic year or the education institution’s estimation, whichever is higher Meeting the expenses of a person accompanying a patient going for a medical check-up or for medical treatment abroad US$250,000 per year. Commission payment to an agent outside India for the saleselling of commercial or residential land or property in India US$25,000 or … Read more

The current economic climate presents a range of structural and operational challenges for Small and Medium Enterprises (SMEs). Finance management is one of the most crucial things for making sure your business succeeds. SMEs have to be involved in a range of activities like keeping their customers happy, staying better than the competitors, and doing all the day-to-day operations. Consequently, they have little time left to focus on bookkeeping, financial analysis, and statutory compliance. That is where Account Outsourcing comes into the scenario. It is not just about saving money but it is a smart move that can help you control your finances better without having to worry about all the complicated accounting tasks. Let us understand how outsourcing your Accounting work to experts can change the way you run your business and make operations easier. Regulatory Requirements for Account Outsourcing: Following are the provisions under different laws requiring the maintenance of books of accounts by entities carrying of a business or profession: Section 128(1) of the Companies Act, 2013 requires every company to prepare and keep the books of account and other relevant books at its registered office. Section 44AA of the Income-tax Act, 1961, mandates the maintenance of books of account by certain persons engaged in specified professions and businesses. It provides for the preparation and maintenance of books of account by a person if his income or gross turnover or receipts, as the case may be, exceeds the prescribed threshold limit. Section 36 of the CGST Act, 2017 requires every registered person to keep and maintain the account books and records for at least 72 months (6 years) from the due date of furnishing of annual return for the year pertaining to such accounts and records. Section 34 of the LLP Act, 2008 requires limited liability partnership to maintain proper books of account as may be prescribed relating to its affairs for each year of its existence on a cash basis or accrual basis and according to double entry system of accounting and shall maintain the same at its registered office for such period as may be prescribed. Thus, all types of entities, irrespective of their form, have to mandatorily maintain their books of accounts as per the provisions of the applicable Laws. Why Should You Outsource Your Accounts? Outsourcing accounting does not mean handing over responsibilities, but it is more of bringing in expertise, efficiency, and professionalism in the accounts department and giving yourself more bandwidth for expanding business. There are numerous reasons why accounts should be outsourced. Here is why it is worth considering: Save cost and time Related Read: Enhancing Tenant Relations and Lease Management with Yardi Voyager Small and Medium-sized enterprises often face challenges in maintaining an efficient in-house accounting team. Limited resources and expertise make handling complex financial tasks difficult. A major challenge is continuously training and retaining qualified employees. Maintaining an in-house accounts team is quite expensive. You have to pay for hiring costs, salaries, employee benefits, perks, training, and statutory compliance. Apart from this consider the cost of providing office space, and software subscriptions. Outdated accounting systems further complicate financial management. Without updated knowledge and the latest technological tools, managing accounts may lead to inefficiencies and inaccuracies. In contrast, the account outsourcing model provides you a cost-effective solution. By outsourcing accounting functions, you can eliminate these overheads and get access to skilled and experienced professionals at a relatively lower cost. You get better results for lesser cost and extra hours for your business growth and expansion. It ensures cost savings, expertise, timely statutory compliances, and access to the latest tools without the burden of an in-House team. Access to experts who understand compliance Account outsourcing is a strategic approach that helps businesses in improving financial efficiency and regulatory compliance. Navigating the complex tax laws, tax filings and compliance requirements is a daunting task and very time-consuming process. These laws are constantly changing and one needs to be always updated with the latest regulations, amendments, and reforms. This represents a full-time job. The consequence of any non-compliance can be severe and can attract interest and penalties. These compliance risks can be managed well with the help of Account outsourcing. Outsourcing ensures that your accounts are always managed by experts who know the rules and the latest changes. These ensure you never miss deadlines and avoid paying penalties. By outsourcing to a specialized firm, organizations can stay updated on evolving regulations with minimum financial management risks. More focus on growing your business As a business owner, your time is valuable. It is essential to prioritize activities that can drive growth, innovation, and customer satisfaction. Rather than getting buried in the umpteen spreadsheets, it is better to have more time to focus on better customer relations, develop new products, and expand new markets. Account Outsourcing allows you to free up your time and resources and helps you channel your energy to what you do best i.e. driving business success and growth of your business. This leaves the accounting part with professionals who have the requisite expertise and bandwidth to do the job. Flexibility As your business grows, your accounting requirements become more and more complex. As your company’s financial landscape undergoes significant changes, more sophisticated financial management and accounting expertise is needed. Whether you are a startup with basic bookkeeping requirements or an established SME navigating cashflow challenges, Account outsourcing offers scalability and flexibility tailored to your current stage of growth. With Account outsourcing, you can easily adapt to changing accounting requirements ensuring your accounting is aligned with your evolving business needs. Leverage technology Professional Accountants leverage the benefits of using the latest technologies in streamlining your accounting with enhanced accuracy and providing actionable insights. They use cutting-edge technology to automate various routine and repetitive tasks, reduce errors, and generate productive reports. This means that by outsourcing accounts, you gain access to the latest software and tools without any real investment in them. How Can We Help You Succeed? At the heart … Read more

Gujarat International Finance Tech-City (GIFT City) is India’s emerging international financial hub, situated in Gandhinagar between Ahmedabad and the state capital. Designed as a global financial centre, it manages international financial transactions outside domestic jurisdiction in India. Regulated by the International Financial Services Centres Authority, the zone offers strong regulatory support and tax incentives. The government recently allowed individuals to open foreign currency bank accounts in GIFT City. With advanced infrastructure and favourable policies, the financial hub aims to compete with global centres such as Singapore and Dubai while attracting international investors and businesses. Reasons to Choose GIFT City for Business Setup Gujarat International Finance Tec-City has rapidly emerged as one of India’s most promising destinations for global businesses and financial institutions. Its progressive regulatory framework, attractive tax incentives, and world-class infrastructure create an ecosystem designed to support international commerce. These advantages make GIFT City an appealing location for organisations seeking efficient market access and long-term growth opportunities in India. Internationally benchmarked regulatory environment Gujarat International Finance Tec-City operates under a globally aligned regulatory framework supervised by the International Financial Services Centres Authority. This structure simplifies compliance while maintaining high international standards. Businesses benefit from transparent governance and streamlined regulatory procedures that reduce administrative complexity. Tax incentives Recognised as a Special Economic Zone under the Special Economic Zones Act 2005, GIFT City offers substantial fiscal advantages to businesses. Companies operating within the zone can access various tax incentives designed to enhance investment efficiency. These benefits significantly reduce the overall tax burden and support stronger long-term returns. Ease of doing business The policy ecosystem within GIFT City prioritises operational efficiency and investor convenience. Simplified procedures, supportive regulatory bodies, and clear compliance guidelines enable businesses to establish and operate with minimal friction. This environment allows organisations to focus on growth and innovation rather than administrative hurdles. State-of-the-artinfrastructure Established in 2015, GIFT City was developed with advanced technology and modern urban planning at its core. The financial hub features premium office spaces, high-speed digital connectivity, and world-class utilities. Such infrastructure supports financial institutions and global businesses seeking a sophisticated operational base. Strategic location Situated in Gandhinagar and positioned between Ahmedabad and the state capital, GIFT City follows a well-planned tri-city development approach. This location ensures strong connectivity and easy accessibility for businesses and professionals. The strategic positioning enhances its potential as a dynamic financial and commercial hub in India. Tax Benefits for Setting up Business in GIFT City Gujarat International Finance Tec-City offers a highly competitive tax framework designed to attract global businesses and financial institutions. The regulatory structure under the International Financial Services Centres Authority provides multiple fiscal incentives that reduce operational costs and improve investment returns. These advantages make GIFT City an attractive destination for companies seeking tax efficiency while expanding their presence in India. It is also an ideal location for organisations planning Company Registration consultant in india while gaining access to global financial markets. Income Tax Benefits Fund managers operating within GIFT City can claim a 100% income tax exemption for ten consecutive years within a fifteen-year period. During this time, profits earned from fund management activities remain exempt from taxation, which supports early-stage growth and capital accumulation. If the Minimum Alternate Tax (MAT) becomes applicable, companies may still benefit from a reduced MAT rate under Section 115JB of the Income Tax Act. These provisions generally apply to profits generated through Special Economic Zone operations. GST and Custom Duties As GIFT City operates as a Special Economic Zone under the Special Economic Zones Act 2005, goods and services supplied to locations outside the SEZ qualify as exports and attract a 0% GST rate. Transactions conducted within the GIFT ecosystem are also treated as zero-rated supplies, which removes the burden of GST for many internal operations. Imports into the zone follow standard customs regulations. However, when such imports are later exported outside the SEZ, they are treated as zero-rated supplies and no GST is levied on these components. Businesses established in GIFT City can also utilise warehousing facilities that allow customs duty deferment or exemptions until the goods enter the domestic market. Particulars  Units in IFSC  Income Tax  100% tax exemption for 10 consecutive years out of 15 years MAT/AMT at 9% of book profits applies to company/other setups as a unit in IFSC. MAT not applicable to companies in IFSC opting for the new tax regime From April 01, 2020, dividend income distributed by company in IFSC will be taxed by the shareholder Goods & Services Tax  No GST on services received by units in IFSC No GST on services provided to IFSC/SEZ units or offshore clients GST applicable on services provided to DTA Other Taxes Duties  State subsidies including lease rental, PF contribution, and electricity charges Special Economic Zone (SEZ) Advantages A Special Economic Zone is a designated region within a country that enjoys relaxed financial and regulatory policies compared to the domestic economy. Such zones are created to attract global businesses, increase foreign investment, and stimulate economic development. For a rapidly developing economy such as India, SEZs play a critical role in strengthening global trade and investment flows. Establishing operations in Gujarat International Finance Tec-City allows businesses to fully leverage these SEZ advantages. Companies operating within the zone benefit from duty-free import and export of goods and services, along with a regulatory environment designed to support international finance. However, the advantages of GIFT City extend beyond tax benefits alone. Unlike many SEZs in India that focus primarily on manufacturing, GIFT City is specifically designed for financial services and related sectors. Its strategic location and strong regulatory integration enable seamless connectivity with global financial markets, positioning it as a unique international financial hub within India. Regulatory Framework and Compliance in GIFT City International Financial Services Centres Authority (IFSCA) functions as the unified regulator governing all financial activities within Gujarat International Finance Tec-City. Established in 2020 and headquartered in Gandhinagar, IFSCA oversees the development and regulation of financial products, institutions, and services within India’s International Financial Services Centres. At present, GIFT City remains the only operational IFSC in India. Prior to the formation of IFSCA, regulatory oversight was shared among multiple authorities such as the Reserve Bank of India, Securities and Exchange Board of India, Pension Fund Regulatory and Development Authority, and Insurance Regulatory and Development Authority of India. Because financial services within an IFSC are closely interconnected, the … Read more