India’s economic growth story is increasingly intertwined with its global trade ambitions. As we move towards the goal of achieving USD 2 trillion in exports by 2030, the importance of accessible, efficient, and robust trade finance infrastructure cannot be overstated. The International Financial Services Centre (IFSC) at GIFT City, Gujarat, backed by the International Financial Services Centres Authority (IFSCA), is fast emerging as a critical enabler in this journey.
In a world where nearly 80% of global trade relies on trade finance instruments like letters of credit, invoice discounting, and supply chain finance, India must rise to meet both the challenges and opportunities presented by a widening global trade finance gap — now standing at over USD 2 trillion, as per ADB estimates.
Enabling Trade Finance through IFSC Banking Units
IFSC Banking Units (IBUs), set up by both Indian and foreign banks, are playing a transformative role by offering multicurrency trade loans, credit, forfaiting, and factoring services. With RBI now permitting Indian exporters to hold foreign currency accounts abroad, IBUs are well-positioned to facilitate smoother international transactions. Notably, IBUs in GIFT City have disbursed an impressive USD 13.79 billion in trade finance as of June 2025.
These units also provide critical risk management tools such as foreign exchange and interest rate derivatives, enabling exporters to hedge against volatility and enhance financial predictability.
Finance Companies and Legal Frameworks
Complementing the role of banks, Finance Companies and Units, modeled after NBFCs, are offering trade finance solutions such as factoring and forfaiting under a robust regulatory regime. With the 2024 regulations around receivables assignment in place, the ecosystem now supports more secure, legally enforceable transactions. Currently, four finance companies, including an EXIM Bank subsidiary, are active in this space, having handled USD 9.38 million in trade finance last fiscal year.
Digital Disruption with ITFS Platforms
Digital-first platforms under the International Trade Financing Services (ITFS) model are redefining how trade finance operates. By facilitating faster processing, competitive bidding, and global financier access, these platforms have facilitated USD 29.79 million in transactions in FY 2024–25. ITFS entities are also permitted to interconnect with other market infrastructure platforms globally, driving greater integration and efficiency.
Sustainable Finance and Capital Markets
In alignment with global ESG goals, IFSCA mandates that 5% of lending should be directed toward sustainable trade finance, encouraging responsible financial flows. Furthermore, Indian exporters can now tap international markets by listing foreign currency or masala bonds in GIFT City, enjoying tax-efficient structures with just 9% withholding tax for non-resident investors.
Risk Mitigation via Insurance
Exporters face several risks — from payment defaults to political disruptions. The IFSC Insurance Offices (IIOs) provide essential protection through trade credit insurance covering risks like non-acceptance, re-shipment, and more. IIOs also advise exporters in navigating global uncertainties.