finance

Published on 4 April 2025

Revised Fee Structure for International Trade Finance Service Operators in IFSCs

Introduction

International Financial Services Centres Authority (IFSCA) has floated a new fee framework for International Trade Finance Service (ITFS) operators effective April 1, 2025. The development is among sweeping regulatory revamp to usher greater transparency, operating efficiency, and international competitiveness to institutions based in International Financial Services Centres (IFSCs) like GIFT City. Herein below are presented the major amendments, compliance mandate, and strategic considerations for interested stakeholders.

Key Points of the New Fee Structure

1. Gradated Fee System Based on Turnover

The new fee structure has a graduated recurring fee system directly related to the turnover of transactions performed on the ITFS platform per year. This ensures equity and scalability for new entrants and existing players.

  • Registration Fee: A one-time registration fee of $10,000 for all new ITFS platforms.
  • Recurring Fees: Fees range from $3,000 to $15,000 every year, listed as follows:
    • Turnover up to $25 million: $3,000
    • Over $25 million up to $50 million: $5,000
    • Over $50 million up to $100 million: $7,000
    • Over $100 million up to $200 million: $10,000
    • Over $200 million: $15,000

2. Application, Activity-Based, and Processing Fees

  • Application Fee: The $1,000 application fee is remitted at the submission of the preliminary application.
  • Activity-Based Fees: Different fees may be charged depending on specified regulated activities based on actual business practice and thus regulatory obligation.
  • Processing Fee: Administrative changes of terms in registration involve a 20% surcharge of registration price. Certain document changes entail a flat fee of $500 charge to alleviate the burden of administra-tion.

3. Compliance with Previous Directives and Legal Provision

The revised circular amends Clause 22 of the "Guidelines on Setting Up and Operation of International Trade Finance Service Platform, 2024" released on December 23, 2024, and reaffirms the provisions of the earlier circular dated May 17, 2023.

This notification is pursuant to Sections 12 and 13 of the IFSCA Act, 2019, which authorize the IFSCA to regulate and promote financial products and services in IFSCs.

Subtle Details and Deep Knowledge

4. Pro-Rata and Conditional Fee Calculation

  • Pro-rata Calculations: Periodic fees will be charged only for the time when new entrants are in operation for a year, decreasing new entry costs.
  • Conditional Fees: These are levied on an annual basis based on actual turnover, prepayments being later adjusted for better compliance predictability to operators.

5. Sector-Specific Customization and Clarity

The new circular consolidates previous guidelines, putting forward sector-specific fee frameworks for industries such as banking, insurance, capital markets, and fintech, with detailed examples.

For instance, fintech companies both have recurring charges that are both turnover and authorization based, while fund management institutions have a $500 fee for document change of scheme documents.

6. Improved Operation and Regulation Requirements

Businesses are required to incorporate a company under the Companies Act, 2013, and get themselves registered as a Finance Company under the IFSCA (Finance Company) Regulations, 2021.

A few of the major requirements include:

  • Minimum capital requirement
  • Strong IT infrastructure
  • Processing in real time
  • Cyber security controls
  • Business continuity policies

Entities must maintain accounts in USD, with payments on trade permitted in any foreign currency, like INR, making platforms of ITFS more popular.

7. Late Fees and Informal Guidance

  • Late Payment: A 0.75% monthly interest is levied on late fees, and a $100 monthly fee is charged on late periodic returns, emphasizing the need for punctual compliance.
  • Informal Guidance Scheme: Members can seek regulatory clarification at a cost of $1,000 per request, with a proportionate refund for ineligible questions, complementing an open regulation regime.

8. Payment Modes and Documentation

Fees need to be paid in USD, except for Indian applicants, who can pay fees in INR at the RBI reference rate. Payment proofs need to adhere to formats decided by IFSCA in order to bring consistency and traceability.

Real-World Example: GIFT City's ITFS Platform

For example, GIFT City ITFS platform transacted over $60 million worth of trade finance transactions during the previous year. Under the new regime, it would be paying a $10,000 registration fee and a $7,000 recurring fee annually for the 2025-26 financial year, aligning regulation fees with the size of the business and allowing it to scale up as an international trade finance hub.

Why This Matters

  • Creates a Level Playing Field: By linking fees to transaction volumes, the IFSCA ensures that small players enjoy reasonable charges, whereas large players pay reasonably towards regulatory expenses.
  • Raises Global Competitiveness: The new regime aligns IFSCs on par with international benchmarks, further positioning India as a more preferable destination for international trade finance operations.
  • Improves Transparency and Predictability: Clearly established fee structures, project timelines, and regulatory requirements reduce uncertainty for stakeholders, enabling more effective financial planning and risk management.
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