India, UK agree to back GIFT IFSC, welcome wider rupee use
India and the UK held their fourth Financial Markets Dialogue in London on September 29, 2026. In a joint statement on October 7, they agreed to keep cooperating on developing GIFT IFSC and discussed cross-border equity and bond listings there. Both sides welcomed wider use of the rupee and recognised London as the leading offshore rupee trading hub.
Syllabus: GS3 · Indian Economy & Growth; Prelims; GS2 · Groupings & Agreements
Why it matters
An Indian company seeking foreign investors, an insurer looking for reinsurance on a large risk and a worker saving for retirement all gain when Indian and British regulators work together. Listing equity shares and corporate bonds through GIFT IFSC would let Indian firms raise international capital without leaving India, under a single regulator. Wider use of the rupee abroad lets more trade be settled without dollars, cutting exchange-rate risk for exporters and importers. Cheaper, faster cross-border payments, the aim of the G20 roadmap, help every family that receives remittances from abroad. The larger question is how far India should open its capital account while guarding against fraud and sudden capital flight.
Prelims pointers
- International Financial Services Centres Authority: unified regulator of financial products, services and institutions in IFSCs; before it, RBI, SEBI, IRDAI and PFRDA regulated IFSC business.
- Capital account convertibility: freedom to convert local financial assets into foreign ones and back (Tarapore Committee, 2006); the balance of payments records such flows in its capital account.
- Rupee convertibility: full on the current account since 1994, partial on the capital account; the Foreign Exchange Management Act, 1999 keeps capital account transactions controlled.
- Foreign Direct Investment: 10% or more of a listed company's equity; a smaller stake is portfolio investment by a Foreign Portfolio Investor registered with SEBI.
- Digital rupee (e₹): issued by the RBI and its liability; on retail pilot since December 2022; legal tender under the Reserve Bank of India Act, 1934; earns no interest.
- Unified Payments Interface: instant payment system built on IMPS by the National Payments Corporation of India; it moves money between bank accounts, while e₹ is money itself.
- PFRDA: statutory regulator under the PFRDA Act, 2013; regulates the National Pension System. IRDAI, set up under the IRDA Act, 1999, regulates insurance and reinsurance.
- Greenwashing: false, misleading, unsubstantiated or incomplete sustainability claims, in the definition SEBI uses; SEBI's dos and don'ts for issuers of green debt securities aim to curb it.
Practise a UPSC-style question
With reference to the International Financial Services Centres Authority (IFSCA), consider the following statements:
1. It was established under an Act of Parliament passed in 2019.
2. It regulates financial institutions across India's domestic financial markets as well as in the IFSCs.
3. It is headquartered in GIFT City, Gandhinagar, in Gujarat.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Show the answer
Answer: (c) 1 and 3 only
1 is correct: IFSCA was established on 27 April 2020 under the International Financial Services Centres Authority Act, 2019. 2 is incorrect: IFSCA is the unified regulator only for financial products, services and institutions in IFSCs; domestic markets stay with RBI, SEBI, IRDAI and PFRDA, which regulated IFSC business before IFSCA existed. 3 is correct: IFSCA is headquartered in GIFT City, Gandhinagar, home to GIFT IFSC, India's first IFSC.
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