MC Explains: Can you invest in an IPO in GIFT City? Here's all you need to know about GIFT City IPOs

GIFT City IPO

GIFT City, India’s first and only International Financial Services Centre (IFSC), is set to mark a milestone next month with the first-ever equity initial public offering (IPO). The debut issue by XED Executive Development Ltd., an executive education firm, will raise $12 million and list on NSE IFSC and India INX in mid-October.

While modest in size, the deal carries outsized significance. It tests the International Financial Services Authority’s (IFSCA) Listing Regulations, 2024, which were designed to give India’s offshore hub a competitive playbook against Singapore or Dubai.

Given the nature of GIFT City, an IPO in the special financial zone is unlike any public issue on BSE or NSE. The dynamics and the parameters are much different.

Here's all you need to know about IPOs in GIFT City.

How the process works

Unlike domestic markets, companies listing in GIFT City need to meet just one of three thresholds — $20 million in revenue, $1 million in pre-tax profit, or a $25 million post-issue market capitalisation. Offer documents are required, but issues under $50 million enjoy a lighter-touch filing regime.

An IFSCA official explained that “the framework is meant to encourage startups and mid-sized companies without diluting investor safeguards. Disclosures are IFRS-aligned, pricing can be fixed or book-built, and a 10 percent float is sufficient compared with 25 percent in the domestic market.” Promoter shares face a 180-day lock-up, while anchor investors get a 90-day lock.

Investor incentives

The rulebook is paired with a suite of tax breaks. Issuers enjoy a 10-year income tax holiday and no STT, CTT, GST or stamp duty. For investors, non-residents are exempt from capital gains tax, and debt investments carry a concessional 9 percent withholding tax.

“Structurally, the idea is to make GIFT City attractive for foreign capital that might otherwise list in Singapore or Nasdaq,” said a market participant familiar with the policy intent. Further, trading hours extend up to 22 hours a day, opening access to global flows. However, direct participation by Indian retail investors is barred, except via mutual funds or through the Liberalised Remittance Scheme (LRS).

Opportunities and limits

For issuers, the promise lies in tapping foreign portfolio investors, NRIs and global institutions without leaving Indian jurisdiction. For India’s policymakers, successful listings would showcase GIFT City as more than a derivatives and debt hub.

But hurdles remain. Liquidity in GIFT City's equity market is thin, and the pool of investors is still narrow. “Unless larger companies come forward, the market risks being symbolic rather than substantive,” cautioned a person tracking the development.

The XED test case

XED’s $12 million raise may be small, but it offers a live experiment. With 95 percent of revenue from India and Singapore, and partnerships with Cornell and other global universities, the firm is targeting a 10 percent float under the new regime. Analysts say the implied valuation of 2-3x sales is moderate compared with mainboard edtech peers. The risk is that limited retail access and edtech’s shifting fortunes could dampen subscription. On the flip side, being the first mover could give XED a “halo effect” that later issuers may build on.

Why it matters

If XED lists smoothly, it may embolden more startups and mid-sized companies to consider GIFT City as a stepping stone before a larger domestic or overseas float. Policymakers see it as a way to position India’s own international centre in the capital-market map, instead of letting high-growth firms head straight to Nasdaq or SGX. As one official summed it up: “The IPO is less about XED itself, and more about proving that GIFT City can host equity capital formation. That credibility is what we are really testing.”