Sector snapshot
India pairs very large digital-payment volumes with low insurance penetration and newly raised foreign-ownership limits. GIFT City adds an offshore financial centre inside India, with its own regulator and tax regime.
| Measure | Figure | Source |
|---|---|---|
| FDI equity into the services sector, including finance and insurance, FY2025-26 | USD 10 bn; top sector since 2000 | DPIIT FDI Fact Sheet, March 2026 |
| UPI transactions, FY2025-26 | 241.6 bn, worth ₹314 lakh crore | PIB, 30 April 2026 |
| Insurance penetration, FY2024-25 | 3.7% (life 2.7%, non-life 1%) | PIB, 23 April 2026 |
| Entities registered at GIFT City IFSC, 30 Nov 2025 (including provisional) | 1,034 | Not separately attributed; confirm with IFSCA |
Four things stand out:
- Insurance is open to full foreign ownership. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (assent 20 December 2025) raised the FDI limit in insurers from 74% to 100%. Press Note 1 (2026) of 9 February 2026 made it automatic, in legal effect from 2 May 2026.
- Foreign lenders are buying significant stakes. Foreign M&A in India’s financial sector reached USD 11.7 bn in 2025 (Grant Thornton data, via Reuters), including MUFG’s USD 4.4 bn for 20% of Shriram Finance and Emirates NBD’s 60% of RBL Bank.
- Banks are well capitalised. Scheduled commercial banks’ capital adequacy ratio was 17.2% in September 2025, and their gross NPA ratio had reached a multi-decadal low (Economic Survey 2025-26).
- GIFT City’s tax holiday now runs 20 years. From tax year 2026-27, IFSC units deduct 100% of eligible income for 20 consecutive years out of 25, up from 10 out of 15. In November 2025 GIFT City hosted 38 IFSC banking units with USD 100+ bn of assets.
Where the opportunity is
Recent investment has gone to lenders with scale, to insurers now open to full foreign ownership, to payments and to GIFT City’s offshore platforms. The brochure groups the opportunity into six segments, each tagged with its cap or route.
| Segment | Cap or route | What the sources say |
|---|---|---|
| Private banks | 74% cap | A foreign bank may enter through branches, a wholly owned subsidiary or a stake of up to 74% in a private bank. SMBC agreed to buy 20% of Yes Bank for USD 1.6 bn in May 2025; Emirates NBD completed a 60% stake in RBL Bank in June 2026. |
| NBFCs and consumer lenders | 100% automatic | Regulated NBFCs can be wholly foreign-owned under the automatic route, subject to RBI’s conditions. MUFG completed a USD 4.4 bn purchase of 20% of Shriram Finance in April 2026; in August 2026 Bank of America agreed to acquire up to 49.9% of Jio Credit. |
| Insurance | 100% automatic | Insurers collected premiums of ₹11.93 lakh crore in FY2024-25 and managed assets of ₹74.44 lakh crore at 31 March 2025, yet penetration was 3.7% in FY2024-25. Full foreign ownership is now allowed, subject to IRDAI verification. |
| Payments and fintech | RBI authorisation | UPI processed 241.6 billion transactions worth ₹314 lakh crore in FY2025-26, with volume up 30% on the year. In June 2026 Meta said it would invest USD 900 mn in CRED, valuing it at USD 4.5 bn. |
| Funds and asset management | GIFT IFSC | 194 fund management entities in GIFT City ran 310 schemes with USD 26.30 bn of commitments (Economic Survey 2025-26). An offshore fund can use an India-based fund manager without a business connection if resident participation stays within 5% and other conditions are met. |
| IFSC banking and leasing | GIFT IFSC | Per the Economic Survey 2025-26, 38 IFSC banking units held USD 100+ bn of assets, and 33 aircraft lessors (303 aviation assets) and 34 ship lessors (28 vessels) operated there. IFSC banking units of foreign banks can finance leasing. |
The FDI tables add further activities: pension funds, asset reconstruction and credit information companies, exchanges, depositories and clearing corporations, white-label ATM operators and insurance intermediaries. See FDI rules.
Two routes in
A foreign entrant can serve offshore clients from a GIFT City IFSC unit, Indian customers through a regulated onshore entity, or both. Clearing the FDI cap does not license the business: each activity needs registration or authorisation from its regulator before it starts. IFSCA, set up in April 2020, regulates IFSC business in place of RBI, SEBI, IRDAI and PFRDA.
Guide to this section
- Recent investments: the seven public deals the sources report, with sizes and dates.
- FDI rules: caps, routes and key conditions for every activity, plus the land-border test.
- Regulators and registrations: which authority licenses what, and the capital each licence needs.
- Central incentives: the GIFT City deduction, MAT, and the 2026 fund and FII tax changes, with status as of 1 October 2026.
- State incentives: Gujarat’s GIFT City package and the lapsed Tamil Nadu fintech policy.
- Tax and zones: GIFT City exemptions and the general corporate tax tables for tax year 2026-27.
- Set-up roadmap: the ten-step route, entry vehicles and incorporation.
- What to watch: ownership tests, licence capital and data rules.
- Recent changes: the timeline since September 2025.
- Sources: every reference the brochure cites.
What to check next
- Confirm which of the six segments your business falls into and whether the cap is 74%, 49% or 100%.
- Decide whether the IFSC route, the onshore route or both fit your client base.
- Identify the regulator for each product line, since the licence, not the FDI cap, gates commencement.
- Check whether any proposal you rely on (such as the 15% post-holiday IFSC rate) has been enacted.