On 15 October 2026, India’s Department of Commerce notified the Special Economic Zones (Fourth Amendment) Rules, 2026. For units and funds in an International Financial Services Centre (IFSC) such as GIFT City, the rules change how space, lease deeds, commencement dates and approval renewals work, and they replace rule 21B on aircraft and ship leasing. They apply from the date of publication in the Official Gazette.
What changes for a fund set up in GIFT City?
Take a fund management entity (FME), which we will call Alpha Fund Managers, that sets up a new fund in GIFT City. The name is invented for illustration; the rules involved are real.
Before launch, the Developer of the GIFT City building writes to Alpha confirming that office space is available for it. Alpha then signs the lease deed for that space. Under the amended rules, for the purposes of rule 18 the Developer’s letter to Alpha counts as the new fund’s provisional offer of space, and the lease deed Alpha signed counts as the fund’s lease deed. Alpha does not need a space offer and a lease deed in the fund’s own name. If Alpha later sets up a second fund in an IFSC, the same two clauses apply to that fund.
Under new clauses (ii a) and (ii b) of rule 18(2), the provisional offer of space that the Developer confirms in writing to the FME counts as the fund’s provisional offer of space. The lease deed the FME signs counts as the fund’s lease deed. A new proviso to rule 22(3) also says nothing in that sub-rule applies to a fund set up in an IFSC.
What do the rules change?
| Rule | What the amended rules say | Applies to |
|---|---|---|
| Rule 18(2), new clauses (ii a) and (ii b) | For a fund set up in an IFSC, the Developer’s written provisional offer of space to the FME is the fund’s provisional offer, and the lease deed executed by the FME is the fund’s lease deed. | Funds and FMEs in an IFSC |
| Rule 19(4), two new provisos | For a Unit set up in an IFSC, commencement of service activity is the date the IFSCA grants the first recognition, registration, licence or authorisation in its final form. That date stays the same even if the authorisation later ceases to be valid. | IFSC Units |
| Rule 19(6B), new proviso | For a Unit set up in an IFSC, renewal of the Letter of Approval is decided on the IFSCA’s recommendation, on three criteria: employment generated, instances of violating applicable statutes, and any default in statutory payments. | IFSC Units |
| Rule 21B, replaced | A Unit, or a person planning one, to undertake aircraft or ship leasing in an IFSC may use the office space or manpower, or both, of another Unit authorised for aircraft or ship leasing or Trust and Company Service Provider (TCSP) activity, as approved by the IFSCA. Sharing is allowed only with a TCSP that serves that person. The person needs no separate provisional offer of space or lease deed. The shared Unit’s suffice for rule 18. | Aircraft and ship lessors, TCSPs |
| Rule 22(3), new proviso | Nothing in the sub-rule applies to a fund set up in an IFSC. | Funds in an IFSC |
How are the key terms defined?
The new clauses use the meanings in clauses (n) and (gg) of regulation 2 of the International Financial Services Centres Authority Regulations, 2025 for “fund management entity” and “fund”. “International Financial Service Centre” has the meaning in section 3(g) of the International Financial Services Centres Authority Act, 2019 (50 of 2019) and the rules and regulations made under it.
Who is affected?
Fund management entities and funds
Rule 18(2) clauses on space and lease deed, and the rule 22(3) proviso.
Aircraft and ship lessors, and TCSPs
The replaced rule 21B on shared office space and manpower.
All IFSC Units
Rule 19(4) on the commencement date and rule 19(6B) on renewal of the Letter of Approval.
When does it apply?
The rules say they come into force on the date of their publication in the Official Gazette. The notification is dated 15 October 2026 and appears in the Gazette of India, Extraordinary, Part II, Section 3(i).
Practical steps, none of them required by the rules: check that Developer offers and lease deeds are held at FME level for each fund, and that any shared-office arrangement has the IFSCA’s approval and names the TCSP.
Legal basis
- Power used
- Section 55 of the Special Economic Zones Act, 2005 (28 of 2005)
- Principal rules
- Special Economic Zones Rules, 2006 (G.S.R. 54(E), 10 February 2006)
- File reference
- F. No. K-43022/73/2023-SEZ, signed by the Joint Secretary, Department of Commerce
- Amended rules
- Rules 18, 19, 21B and 22
Key facts
| Authority | Department of Commerce, Ministry of Commerce and Industry, Government of India |
|---|---|
| Instrument | Special Economic Zones (Fourth Amendment) Rules, 2026 |
| Issue date | 15 October 2026 |
| Effective date | Date of publication in the Official Gazette |
| Applies to | Units and funds set up in an IFSC; aircraft and ship lessors; TCSPs |
| Status | In force |
| Official source | Gazette of India, Extraordinary, Part II, Section 3(i) |
| Last verified | 21 October 2026, against the Gazette copy in the Neurasix library |
Frequently asked questions
Does each fund need its own lease deed now?
Under new clause (ii b) of rule 18(2), the lease deed signed by the fund’s FME is treated as the fund’s lease deed.
Does an aircraft or ship lessor sharing an office need its own space offer and lease deed?
No. Under replaced rule 21B(2), the provisional offer of space and lease deed of the Unit whose space is shared suffice for rule 18.
What counts as commencement for an IFSC Unit?
The date the IFSCA grants the first recognition, registration, licence or authorisation in its final form. It stays the same even if that authorisation later ceases to be valid.
Who decides renewal of a Letter of Approval for an IFSC Unit?
Renewal is decided on the IFSCA’s recommendation, on employment generated, violations of applicable statutes and defaults in statutory payments.
Sources (official)
- Special Economic Zones (Fourth Amendment) Rules, 2026, G.S.R. 895(E), Ministry of Commerce and Industry notification of 15 October 2026, Gazette of India, Extraordinary, Part II, Section 3(i) https://sezindia.gov.in/sites/default/files/sez_rules_amendments/Rule%2021B%20dt.%2015th%20October%2C%202026_1.pdf
- Special Economic Zones Act, 2005 (28 of 2005), section 55 https://sezindia.gov.in/sites/default/files/SEZAct2005.pdf
- International Financial Services Centres Authority Act, 2019 (50 of 2019), section 3(g) https://dea.gov.in/files/other_reports_documents/214809.pdf
- India
- GIFT City
- IFSC
- Special Economic Zones
- Fund management
- Aircraft leasing
- Ship leasing
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