Fund raising through foreign currency bonds (FCBs) in Gujarat International Finance Tec (GIFT) City’s on its two international stock exchanges – NSE IX and India INX— has seen several large issuances worth well above $4 billion in the calendar year 2025.
This includes ICICI Bank’s $700 million foreign-currency-bonds (FCBs) at 4% and $500 million at 3.8%. There is also Muthoot Finance’s September listing of $600 million, Tata Capital ($400 mn) and IIFL Finance ($325 mn). Colombo-based DFCC Bank’s FCB is the latest to list on India INX, on September 26.
In the near-term, ECGC that provides export credit insurance to businesses in GIFT City is planning a FCB listing there. So are NaBFID, SMFG India and several other shadow banks. NABARD is setting up a representative office there to raise external commercial borrowings (ECB) for climate change projects from impact investors.
FCBs are part of the ECB category of fundraising by corporates. In FY26 till July, the ECB registrations with RBI were $11.7 billion – just one-fifth of $61.18 billion that was raised in FY25.
Cost advantage: Why issuers are choosing GIFT City
Experts say that the main reason for this rise is the cost advantage, as there is the lower withholding tax rate of 9% compared to an average 15% in major foreign destinations. In addition, there is a debt diversification opportunity as well. For example, Indian companies issuing FCB listed in Singapore – among the most popular destinations – typically face a withholding tax rate (WTR) of 15% on interest payments to non-resident investors, under the India–Singapore Double Taxation Avoidance Agreement (DTAA).
And at a time, when Indian firms’ FCB listings are going through a tough phase due to global uncertainties, such listings are only expected to rise.
“Infrastructure firms seeking long-term funding and shadow banks (NBFCs) raising capital from social impact funds find this market attractive, despite higher interest rates for FX borrowings,” said Nitesh Jain, Chief Rating Officer at CareEdge Global IFSC (CGIL).
CGIL, the first credit rating agency (CRA) in GIFT City, operational since October 2024, has rated debt worth $4 billion since inception. S&P Global Ratings, whose parent owns Crisil, a domestic CRA, received registration from IFSCA to establish a new branch at GIFT in June 2025.
RBI reforms and future outlook for foreign debt
A key concern for Indian corporates to raise foreign debt is the exchange cost. The hedging cost, often undisclosed, also counts. “For example, SBI raised $500 million at 4.5% interest rate. Assuming the hedging cost of 2-2.5%, the all-inclusive cost would be around 6.5-7%, comparable to INR borrowing,” said an industry player.
To ease such concerns, the Reserve Bank of India (RBI) proposed a new framework for ECBs last week that links corporate foreign debt limits to financial strength and scrapped cost caps. Under this, a company can raise ECBs up to $1 billion or 300% of its net-worth as per the last audited balance sheet, whichever is higher from the earlier limit of $750 million. It also simplified end-use restrictions and minimum average maturity requirements.
These measures and US Federal Reserve interest rate reduction is expected to lead to more fund raising in the second half of FY26.