India And Vietnam Want More Of The World's Money | The Reason Why

India and Vietnam need foreign capital to finance their next growth phase. Both are developing International Financial Services Centres (IFSCs) to attract foreign funds. IFSCs are specialised jurisdictions that help international investors and financial institutions operate more easily.

India's Gujarat International Finance Tec-City (GIFT City) near Ahmedabad and Vietnam's International Financial Centre (VIFC) in Ho Chi Minh City and Da Nang are designed to achieve these objectives.

But the two countries are starting from different points.

India already has a large and sophisticated financial system, while Vietnam is still building one. India was worried about financial transactions taking place in different jurisdictions such as Mauritius, Singapore, Dubai or the Cayman Islands. Vietnam, on the other hand, relies heavily on the banking sector and needs more long-term capital for infrastructure and other sectors.

These needs have shaped their policies and strategies.

Journey of GIFT City

The idea of GIFT IFSC was to encourage investments through India that would otherwise be conducted in other international cities.

The idea for GIFT City took shape in 2007 and became operational in 2017.

The initial objective of bringing India-related financial activity onshore is beginning to show results. Nearly two-thirds of ECBs raised in FY26 so far were routed through GIFT IFSC.

But the objectives go beyond bringing offshore activity back. It is also intended to develop India as an exporter of international financial services. India has allowed various sectors to operate in GIFT City, including banking, insurance, reinsurance, fund management, aircraft and ship leasing, bullion trading, global treasury operations, fintech and other specialised services.

A different regulatory structure enables it. There is a single regulator for GIFT, which is separate from the usual banking and securities regulators.

Banks in GIFT don't have to maintain reserves like domestic banks. Under the Foreign Exchange Management Act (FEMA), IFSC units are treated as non-residents. This gives them greater flexibility to transact in foreign currencies. The SEZ framework also provides tax incentives, including a tax holiday up to 20 years.

As of March 2026, GIFT had more than 1,100 registrations, over $111 billion in banking assets, more than $112 billion in average monthly exchange turnover, over $39 billion in cumulative fund commitments, and over 400 aircraft and ships leased.

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Next Plans for GIFT

GIFT City aims to be an international financial hub.

One part of this is the internationalisation of the rupee. GIFT is expanding products such as rupee derivatives, rupee bonds and rupee-settled transactions, giving international investors and banks a platform to trade and hedge rupee exposure. International companies can now list on IFSC exchanges, opening up a new growth avenue.

Plans to expand land, commercial space, educational institutions and other facilities will help GIFT grow as a standalone city, while the proposed high-speed rail link to Mumbai will connect it to the city's financial institutions and talent.

Journey of VIFC

Vietnam formally began its VIFC journey last year.

Vietnam's credit-to-GDP ratio is already above 140%, reflecting the heavy reliance on bank financing. Its next phase of growth will need more long-duration capital for infrastructure, energy and industrial projects.

Ho Chi Minh City is the broader financial hub, covering capital markets, banking, asset management and other conventional financial activities. Da Nang is intended to focus more on fintech, digital assets, innovation and experimentation.

Vietnam has also changed its laws. It now allows English to be used in proceedings before the specialised VIFC court. The court can even appoint foreign judges and, in some cases, apply foreign law or international commercial customs.

New projects in priority sectors can receive huge tax breaks. Managers, experts and highly skilled professionals working at the centre can receive personal-income-tax exemptions. Foreign investors and professionals get easy access to visas and work permits.

However, it has to move quickly from policy to transactions.

In September, the government urged both centres to develop concrete products and transactions instead of waiting for the full system to be completed. The government has asked the cities to have concrete financial products and transactions in place by November 2026. That will be the first real test.

Final Take

In an increasingly self-reliant world, developing countries are competing harder for foreign capital. India and Vietnam have an added advantage. They are becoming important alternatives to China. As businesses and manufacturing move in, the financial ecosystem around them can grow too.

India has an edge in services, especially finance and technology. Deeper capital markets, skilled professionals and an English-speaking workforce may work in its favour.

VIFC has a different opportunity. It can build on Vietnam's growing manufacturing and infrastructure base while creating new channels for international capital.

GIFT has experience and an established ecosystem. VIFC has a clean slate and can learn from others.

Both could matter in the new world order. But neither can build a financial district and wait for business to arrive. They will have to compete with the Dubais and Singapores of the world. And that could be brutal.

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