IFSCA Seeks Finance Ministry Approval for GIFT City to Become Global Commodity Trading Hub

What IFSCA Is Seeking

The IFSCA has written to the Finance Ministry seeking formal recognition of commodity trading as a financial activity under the law governing GIFT City. This would allow international trading, hedging and financing of commodities such as crude oil, gold, metals and agricultural products to take place from India's financial services centre.

IFSCA has forwarded the recommendations to the Ministry of Finance for consideration.

The Expert Committee Foundation

An expert committee formed in May 2024 was tasked with addressing India's fragmented commodity trading landscape and the significant 'offshoring' of trade, which limits India's influence on global pricing and results in a loss of revenue and jobs. The committee's report was released on 1 August 2025.

The recommendations cover regulatory enablement to notify commodity trading as a financial service and permit new derivatives, policy alignment to exempt traders from certain RBI restrictions, and significant banking and tax incentives.

How This Would Work

Similar recognition for commodities would enable electronic trading, hedging through commodity derivatives, trade financing, merchanting and re-invoicing of global commodity transactions. This includes merchanting and re-invoicing, where a firm manages the purchase of commodities from one country and their sale to another without the goods physically entering India.

IFSCA would regulate only the financial aspects of commodity trading, while physical infrastructure such as warehousing and logistics would continue to remain under the existing Free Trade Warehousing Zone (FTWZ) and SEZ framework.

GIFT City's Current Position

Banking assets at GIFT City have already crossed $111–$114 billion, while commitments to non-retail investment funds have reached $39.3 billion, underscoring the financial centre's expanding scale. GIFT IFSC has the potential to become a global commodity trading hub, given that it already possesses the characteristics of a global financial centre, a strong banking network, and a more favourable tax regime than other financial centres.

Why This Matters for India

Despite being one of the largest consumption markets and largest importers of many commodities, most commodity traders are executing trades from other financial centres rather than from India. The initial objective is to onshore Indian firms that have migrated to global commodity trading hubs.

The Bullion Exchange Precedent

The government previously notified bullion trading as a financial activity, paving the way for the launch of the India International Bullion Exchange (IIBX) in GIFT City in 2022, inaugurated by the Prime Minister, which has since expanded from spot gold and silver trading to futures contracts. IFSCA now wants that same recognition extended to a wider range of commodities, given GIFT IFSC's potential to become a global commodity trading hub.

What Happens Next

The key monitorable will be the timeline of the Finance Ministry's decision and the subsequent release of operational guidelines by the regulator. If approved, the development of a comprehensive legal structure for commodities could attract new trading participants to the center and increase the volume of financial transactions within the region.

As of July 22, 2026, the proposal remains under Finance Ministry review.