The India International Financial Services Centres Authority (IFSCA) has published the report of its Expert Committee on positioning GIFT IFSC as a Global Commodity Trading Hub. The report presents a set of recommendations spanning regulation, cross-border policy alignment, banking and taxation, infrastructure and market development to support commodity trading and related financial services within the IFSC. Key proposals include notifying commodity trading, including merchanting trade, as “financial services” under the IFSCA Act, 2019, permitting issuance and trading of over-the-counter commodity derivatives, expanding the list of commodities eligible for exchange-traded derivatives and allowing re-invoicing in the IFSC. The report also calls for exemptions for IFSCA-regulated commodity traders from the Reserve Bank of India’s merchanting trade restrictions, amendments to FEMA regulations to enable centralized hedging for commodity price risk for Indian group entities, a right of first refusal for IFSC entities in government procurement and permission for IFSC commodity trading entities to engage ships solely on a voyage charter basis. Banking and tax recommendations include amending the Banking Regulation Act to allow IFSC banks to conduct broader commodity trading beyond bullion, extending the IFSC unit tax holiday from 10 to 25 years or until 2047 and introducing a concessional tax regime for overseas professionals relocating to GIFT IFSC, alongside measures on warehousing and logistics near key ports, customs filing exemptions for offshore transactions, and enabling structured finance, securitization and trade finance bond listings. IFSCA will examine the recommendations and take up proposals with the Government of India and other agencies within the next few months.

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