The International Financial Services Centres Authority is seeking government approval to expand GIFT City’s role by including commodity trading as a recognised financial activity, potentially making India a key player in global markets.
The International Financial Services Centres Authority is pressing for a change that could allow commodity trading to be treated as a financial service in GIFT City, as the regulator seeks to broaden the Gujarat hub’s role beyond banking, fund management and insurance. K Rajaraman, the IFSCA chairperson, said the proposal is now under review by the Indian government and that the authority hopes for a response soon.
Speaking at the MCX Global Commodity Conclave, Rajaraman said the aim is to build GIFT-IFSC into a major centre for global commodity trading and to help India move from being a price taker to a price setter. He argued that the presence of international financial institutions in the hub, along with stronger liquidity and balance sheets, could give the market the depth it needs.
According to Moneycontrol, the regulator has already taken the idea to the finance ministry and wants legal recognition for activities such as electronic trading, hedging, commodity derivatives, trade finance, merchanting and re-invoicing. The report said IFSCA is looking to bring home Indian commodity firms that currently operate from centres such as Singapore, Dubai and Switzerland, where long-established trading ecosystems have drawn business away from India.
Rajaraman also drew a line between financial activity and physical handling of goods. He said IFSCA would oversee the market and financing side, while warehousing, logistics and related infrastructure would continue under the existing free trade warehousing and special economic zone framework. He added that some funds in GIFT City have already begun trading precious metals, which could open the door to broader commodity participation later.
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