If you have been following GIFT City’s journey as India’s international financial hub, you may have heard a growing buzz in the leasing community: “Physical presence in IFSCA is no longer mandatory.” It is a statement that has been doing the rounds since the Government of India published two landmark notifications in the Gazette of India on 7 May 2026.
But is that statement entirely accurate? And more importantly — what does this really mean for your business?
In this article, we break it down plainly.
What Was Published — The Two Notifications
Two separate amendments were notified simultaneously, both dated 5 May 2026, and both directly relevant to entities engaged in — or considering — leasing and financing activities through GIFT IFSC.
| Notification 1 — IFSCA (TechFin and Ancillary Services) (Amendment) Regulations, 2026 |
| F. No. IFSCA/GN/2026/008 |
| Inserts a brand new Chapter VA into the IFSCA (TechFin and Ancillary Services) Regulations, 2025, formally creating and regulating a new category of service provider called a Trust and Company Services Provider (TCSP). |
| Notification 2 — IFSCA (Finance Company) (Amendment) Regulations, 2026 |
| F. No. IFSCA/GN/2026/009 |
| Amends the IFSCA (Finance Company) Regulations, 2021, introducing the concept of a Special Purpose Vehicle (SPV) — a Finance Company that can be incorporated and administered by a TCSP — and formally recognising leasing and financing activity undertaken by such SPVs as a permissible activity. |
These two notifications work as a pair. Think of the TCSP as the institutional backbone, and the SPV as the transactional vehicle. Together, they create an ecosystem that global leasing hubs like Ireland, Singapore, and the UAE have had for years — and which GIFT City has been working towards.
Background: What Was Holding GIFT City Back?
To appreciate what has changed, you need to understand what was not working before.
Since the IFSCA (Finance Company) Regulations, 2021, and the Aircraft Leasing Framework of May 2022, entities have been permitted to set up as Finance Companies in GIFT City to undertake aircraft leasing and related financing activities. The regulatory foundations were laid. Tax benefits — including a tax holiday, zero withholding tax on lease payments, and zero customs duty — were attractive.
And yet, a candid assessment by IFSCA itself, captured in its March 2026 Consultation Paper, revealed the uncomfortable truth:
| Many aircraft leasing entities set up in IFSC were functioning only as sub-lessors. The actual ownership of aircraft, the primary financing, the deal structuring, and the professional services running those structures — all of it remained offshore, in Dublin, Singapore, or elsewhere. |
The reason was practical. Under the earlier framework, every leasing entity had to build its own separate establishment in IFSC — its own Principal Officer, its own Compliance Officer, its own governance arrangements, its own registered office. For a global lessor wanting to run even a single-aircraft deal through GIFT City, the fixed cost of maintaining that establishment simply did not justify the effort.
GIFT City had the shell — but not the substance — of a global leasing hub.
What Changes Now: The TCSP Framework Explained
A TCSP is a professionally staffed, IFSCA-registered entity whose entire purpose is to provide company formation, administration, governance, and compliance services to other entities (the SPVs) undertaking leasing activities in IFSC.
In plain terms: a TCSP can now do for many leasing SPVs what each of those SPVs used to have to do for themselves.
Specifically, under the Fifth Schedule inserted into the TechFin Regulations, a TCSP may provide the following services:
| Service | What It Means in Practice |
| Act as an agent for setting up companies, LLPs, or trusts | Incorporates the SPV on behalf of the lessor |
| Act as — or arrange for someone to act as — trustee, director, company secretary, or nominee shareholder | Provides key personnel required for the SPV’s governance |
| Act as — or arrange for — partner or designated partner in an LLP | Same function for LLP-structured leasing vehicles |
| Provide registered office, business address, or administrative address | The SPV’s formal IFSC presence is anchored through the TCSP |
| Any other services as permitted by the Authority | Flexible scope for the ecosystem to evolve over time |
In effect, a single TCSP can serve dozens of SPVs — spreading the fixed cost of IFSC presence across multiple leasing transactions, making even small-ticket deals economically viable.
The SPV Framework: What Notification 2 Adds
The Finance Company Amendment formally introduces the concept of an SPV (Special Purpose Vehicle) — a Finance Company incorporated or administered by a TCSP for undertaking permissible leasing or financing activities.
The real impact lies in the financial and compliance treatment of these SPVs:
| Parameter | Earlier Finance Company (Leasing) | New SPV Category |
| Minimum Owned Fund | USD 3 million (core leasing activity) | Equivalent to paid-up capital under Companies Act, 2013 — significantly lower |
| Prudential Requirements (Regulation 4) | Applicable | EXEMPT |
| Corporate Governance & Disclosure Requirements (Regulation 8) | Applicable | EXEMPT |
The rationale is sound: the SPV is a transaction-specific vehicle, not a full-scale financial institution. It is structured, governed, and supervised through the TCSP, which is itself regulated by IFSCA. The SPV does not need its own parallel compliance layer — the TCSP provides that.
The Physical Presence Question — The Correct Answer
Let us directly address the claim that “physical presence in IFSCA is no longer mandatory.” This is partially correct — but requires important nuance.
What has changed:
Each individual SPV (the leasing entity) no longer needs to maintain its own separate physical establishment, hire its own officers, or independently carry governance infrastructure in IFSC. The TCSP handles all of this on its behalf.
What has not changed:
Physical presence in IFSC is still mandatory — it now sits with the TCSP, not with each SPV. The regulations are explicit on this. Under Regulation 10G of the new Chapter VA:
| “The Principal Officer and Compliance Officer shall be based out of IFSC and shall be full-time employees of the Trust and Company Services Provider.” |
The TCSP must itself be genuinely, physically present in IFSC with proper staffing, governance, internal controls, AML/CFT/KYC systems, and an independent audit framework.
So the more accurate description is: physical presence has been consolidated rather than eliminated. One professionally run TCSP can now anchor the IFSC presence for many leasing SPVs simultaneously.
This is exactly the model that made Ireland’s Shannon Free Zone the world’s leading aircraft leasing hub — where a handful of specialist corporate service providers administer hundreds of leasing SPVs for global lessors.
A Practical Scenario: Before and After
Consider this hypothetical: Company ‘A’ is a global aircraft lessor based outside India. It wants to lease a wide-body aircraft to an Indian carrier through GIFT IFSC to avail zero withholding tax and the full benefits of the Cape Town Convention.
| Before This Notification | After This Notification |
| Company ‘A’ had to incorporate a subsidiary in IFSC, appoint a resident Principal Officer and Compliance Officer as full-time employees, establish its own AML/KYC systems, rent office space, and set up its own governance framework — all for a single-aircraft transaction. The fixed overhead was substantial, and for many deals, simply not worth it. Company ‘A’ continued routing the deal through Dublin. | Company ‘A’ approaches a registered TCSP in IFSC. The TCSP incorporates an SPV (a Finance Company) for Company ‘A’, acts as its nominee director and company secretary, provides the registered office address, manages compliance, maintains records, and handles all regulatory reporting to IFSCA. Company ‘A’ gets the full benefits of GIFT IFSC without building its own establishment. The SPV’s minimum capital requirement is also significantly lower under the new Schedule entry. |
The economics now work for deals that previously did not cross the threshold of viability.
Key Compliance Requirements for TCSPs
For those considering registering as a TCSP, the regulatory requirements under Chapter VA are substantive. IFSCA has ensured this is not a light-touch regime.
Eligibility
- Must be incorporated as a Company or LLP in IFSC
- All promoters/partners must be from jurisdictions not designated as ‘High-Risk’ in FATF’s public statement
Governance Obligations
- A formal Governing Body with a documented governance framework
- Internal audit or independent review mechanism covering AML/CFT/KYC, governance adequacy, and regulatory compliance
- Accurate, up-to-date records for every legal entity administered — retained for a minimum of 5 years post cessation of client relationship
- Segregation of duties controls to prevent end-to-end control by any single function or individual
- A documented conflict of interest management policy
Key Personnel
- Full-time Principal Officer and Compliance Officer, based in IFSC
- Minimum: professional or post-graduate qualification in finance, law, or commerce
- Principal Officer must have at least 5 years of post-qualification experience in financial services
Insurance
- Professional indemnity insurance cover commensurate with scale and risk profile, covering negligence, errors, omissions, and breach of duty
Arm’s Length Requirement
- If the TCSP also provides other services, it must maintain a declared arm’s length relationship between its TCSP activities and other lines of business
Who Are the Eligible Service Recipients?
A TCSP may serve non-resident clients from jurisdictions not flagged as ‘High-Risk’ by FATF. It may also serve SPVs in IFSC even where the transaction is at the request of, or for the benefit of, a person resident in India — provided the SPV is the primary service recipient.
Importantly, the regulations clarify that a person resident in India who sponsors or finances the SPV is not considered a direct service recipient of the TCSP merely by reason of such association. The TCSP’s contractual obligations run only towards the SPV based in IFSC.
The Bigger Picture: India’s Ambition for GIFT City
These notifications are not isolated regulatory events. They are part of a carefully sequenced policy push to make GIFT City a genuine global financial hub — one that can compete with Dublin, Singapore, Hong Kong, and the UAE — not just for the tax arbitrage, but for the depth and quality of its leasing ecosystem.
The IFSCA has, over the past year, progressively filled gaps that were limiting GIFT City’s attractiveness: the TechFin Regulations 2025, the extension of the tax holiday framework, the operationalisation of a single-window IT system, and now the TCSP-SPV architecture. The early market response has been encouraging, with multiple aviation entities establishing leasing structures in GIFT City in the weeks following these notifications.
For global leasing professionals, international aviation financiers, and corporate service providers looking to expand into India’s IFSC ecosystem, the TCSP framework represents a genuine structural shift — not just a regulatory update.
Summary at a Glance
| Aspect | Before | After |
| Physical presence requirement | Every leasing entity needed its own office & staff in IFSC | TCSP can provide this centrally for many SPVs |
| Minimum capital for leasing SPV | USD 3 million (Finance Company) | Just Companies Act paid-up capital — very small |
| Compliance burden on each SPV | Full prudential & governance rules apply | Exempt from key regulations; TCSP handles compliance |
| Global lessors’ practical access | High fixed cost; not economical for small deals | Low cost; single-aircraft deals now viable |
| India’s competitive position vs global hubs | Behind Ireland, Singapore, UAE | Now structurally comparable to those hubs |
Whether you are a global aircraft or equipment lessor exploring GIFT City for the first time, an existing IFSC entity considering TCSP registration, or an Indian sponsor seeking to structure a leasing SPV through IFSC, the TCSP-SPV framework opens pathways that did not exist before.
The regulatory framework is new and the IFSCA’s detailed guidelines for implementation are still evolving. Getting early-mover advantage — with the right advisory support — can make a significant difference.