Setting Up a Leasing Business in GIFT IFSC: A Regulatory and Operational Roadmap
The International Financial Services Centres Authority (IFSCA) has proposed a consolidated regulatory framework for undertaking leasing activities from GIFT IFSC. The consultation paper dated August 13, 2026 seeks to bring the existing aircraft and ship leasing frameworks under a common regulatory architecture while extending the ecosystem to additional eligible equipment.
For prospective lessors, however, establishing a leasing business in GIFT IFSC involves considerably more than incorporating an entity and obtaining regulatory registration. The proposed business model needs to be aligned with the eligible asset, nature of leasing activity, legal structure, capital, operational substance, banking arrangements and ongoing compliance obligations.
Is the Proposed Asset and Leasing Activity Eligible?
The first step is to determine whether the proposed asset and transaction fall within the IFSCA Leasing Framework.
Eligible products and equipment presently proposed include aircraft and helicopters and their engines or parts, aircraft ground support equipment, aviation training simulation devices, ships and ocean vessels and their engines or parts, and oilfield equipment.
A lessor may undertake an Operating Lease or a Financial Lease, including a hybrid of operating and financial lease. Importantly, an applicant intending to undertake both Operating Lease and Financial Lease must obtain separate registration and pay the applicable fees for each activity.
The framework also recognises incidental transactions such as sale and leaseback, purchase, novation, transfer and assignment. Ship and ocean vessel lessors may additionally undertake specified commercial deployment arrangements, including voyage charters and contracts of affreightment, subject to prescribed conditions.
Choosing the Appropriate Legal and Regulatory Structure
The proposed framework provides flexibility in choosing the legal form of the leasing entity.
An applicant may generally be established as a company incorporated in IFSC, a branch of a company incorporated outside IFSC, or another form permitted by IFSCA. An LLP or Trust may also be used where the applicant proposes to undertake leasing activities other than Financial Lease.
The appropriate structure should therefore be evaluated based on factors such as the type of lease, asset ownership, financing structure, number and value of assets, lender or investor requirements and the sponsor’s long-term leasing strategy.
The proposed framework also separately recognises an SPV structure for qualifying leasing transactions, creating an additional structuring alternative for high-value assets.
Eligibility Conditions Before Applying to IFSCA
A prospective lessor must satisfy several conditions at the application stage.
The applicant is required to establish necessary infrastructure in IFSC, undertake to employ at least two qualified personnel based in IFSC before commencement of operations and demonstrate its ability to meet the applicable Owned Fund requirement.
The applicant, promoter and beneficial owner must also satisfy the prescribed FATF jurisdiction condition. Relevant persons, including key managerial personnel and persons exercising control, must satisfy the fit-and-proper requirements. Further, an applicant must not have been refused specified registration, licence, recognition or authorisation by IFSCA during the immediately preceding one year.
Accordingly, ownership, management, funding and regulatory eligibility should be assessed before filing the application.
Registration, Capital and Commencement of Operations
Registration: No person may act as a lessor without obtaining registration from IFSCA as a Finance Company or Finance Unit, as applicable. The application is proposed to be submitted through IFSCA’s Single Window IT System (SWIT) along with the prescribed fees and supporting documents.
Owned Fund: A lessor undertaking Operating Lease or Financial Lease must maintain the minimum Owned Fund prescribed under the Finance Company Regulations. IFSCA may also require additional capital as a risk-management measure, depending upon the nature and scale of the business.
Commencement:Another important requirement relates to operational timelines. The lessor must commence operations within six months from the date of issuance of registration. An extension may be sought in the prescribed manner and, where approved, may be granted for a further period not exceeding three months.
Prospective applicants should therefore develop their staffing, banking, documentation and transaction pipeline alongside the licensing process.
Substance Requirements in GIFT IFSC
The proposed framework places clear emphasis on operational substance.
Apart from maintaining appropriate office space, equipment and communication facilities, the applicant must undertake to employ at least two qualified personnel based in IFSC before commencing operations.
However, the continuing requirement goes further. The framework separately states that a lessor must deploy manpower and infrastructure commensurate with its business operations.
Accordingly, the two-person requirement should not be treated as a permanent staffing benchmark irrespective of business scale. As the asset portfolio, transaction volume or regulatory complexity grows, the operational infrastructure of the lessor should appropriately evolve.
Operating Framework: Banking, AML/KYC, Governance and Sector Compliance
A leasing entity in GIFT IFSC operates within a broader regulatory and operational framework.
For currency operations, the lessor may raise invoices in specified foreign currencies and receive payments into its foreign currency account maintained with an IFSC Banking Unit. Where leasing activity is provided to a person resident in India, INR invoicing and receipt through a Special Non-Resident Rupee (SNRR) account is permitted, subject to the prescribed remittance requirements.
From a compliance perspective, lessors must comply with the IFSCA AML, CFT and KYC Guidelines, 2022. Financial Lease activity is also linked to applicable prudential, KYC/AML, corporate governance and disclosure requirements under the Finance Company Regulations.
Governance requirements include due diligence of Board members at appointment and annually thereafter, prescribed management declarations, Board-level scrutiny and applicable auditor certification requirements.
The framework also permits sharing of office space or manpower with qualifying group entities, but only subject to the Special Economic Zones Rules, 2006 and prior IFSCA approval under Rule 21B, along with the prescribed conditions.
Further, the consolidated framework does not replace asset-specific legislation. Aircraft and ship lessors must continue to comply with the respective sector-specific laws, rules, regulations, notifications and circulars referred to in the framework.
Conclusion
The proposed IFSCA Leasing Framework 2026 provides a more consolidated platform for undertaking international leasing activities from GIFT IFSC. At the same time, regulatory access is accompanied by clear expectations around capital, local substance, governance, banking arrangements and ongoing compliance.
For prospective lessors, the appropriate approach is to design the business structure, regulatory model and operating framework together from the outset. A well-planned setup can help ensure that the legal form, asset ownership, financing, people, banking and compliance architecture remain aligned with the intended leasing activity.
As GIFT IFSC’s leasing ecosystem expands beyond aircraft and ships into a broader range of high-value assets, the proposed framework could provide an important foundation for developing internationally oriented leasing platforms from India.
This article is based on the IFSCA consultation paper dated August 13, 2026. The framework is presently in draft form and may be modified before final issuance.
