One of the key initiatives in the pipeline for the GIFT City regulator is to bring global commodity trading to India—a segment currently dominated by offshore jurisdictions, said K. Rajaraman, chairperson of the International Financial Services Centres Authority (IFSCA).
“If India aims to become a manufacturing hub, it must also emerge as a strong participant in the global commodity trading market,” Rajaraman said in an interview with Mint on the sidelines of the Global Fintech Fest 2025.
Expanding the trading basket
The range of commodities that could be traded at GIFT IFSC may include electronic components such as resistors, capacitors, and chips, as well as energy products like hydrogen, ammonia, crude oil, and natural gas. High-volume agricultural commodities such as rice and edible oils could also be part of the mix, he added.
An expert committee that submitted its report in August studied mature commodity trading jurisdictions and outlined recommendations to help position GIFT IFSC as a global commodity trading hub.
The rationale, according to the report, is that the absence of a globally competitive trading ecosystem within India has led to many large transactions and financial services being routed through offshore centres. This not only reduces India’s influence on global commodity pricing but also results in the loss of valuable economic activity, employment, and tax revenues.
“Based on those findings, we have submitted recommendations to the government, and a few amendments to existing laws may be required,” Rajaraman said.
Legal and tax tweaks
Some of the key suggestions include amending the Banking Regulation Act to allow banks operating in GIFT IFSC to engage in a wider range of commodity trading beyond bullion, the expert committee noted.
It also recommended notifying commodity trading as a financial service and extending the tax holiday for IFSC units from 10 to 25 years—or till 2047—along with a concessional tax regime for overseas professionals relocating to GIFT City.
Some of the global commodity jurisdictions include Singapore, the UAE, the UK, and Zurich.
“Switzerland doesn’t produce any oil, but it has some of the biggest oil trading hubs in Zurich and other places. There is a great opportunity for India to bring back a lot of such activities,” Rajaraman added.
Currently, spot trading in gold and silver is available on the India International Bullion Exchange (IIBX) in GIFT IFSC. Over time, commodity trading is expected to expand to cover a broader basket of products, Rajaraman said.
