India’s economic gains and geopolitical standing bring efforts to establish itself as a globally integrated financial center into sharper focus.
A key aspect of this vision is Gujarat International Finance Tec-City (GIFT City), a special economic zone that is positioned as a “gateway to the world.” But recent developments – including a Securities and Exchange Board of India (SEBI) crackdown on options trading – suggest that there are bumps in the road, contradictions and complexities to overcome.
Few have been as vocal in championing GIFT City and its International Financial Services Centre as Ashishkumar Chauhan, managing director and chief executive officer of the National Stock Exchange of India (NSE) in Mumbai. “Today, GIFT City conceptually represents the role that Hong Kong played for China in the last 40 years,” Chauhan said in March.
As reported then, Chauhan envisions a magnet for international capital and potentially stock listings, particularly in AI and tech sectors, as a competitive, lower-cost alternative to traditional markets.
NSE Chief Executive Ashishkumar Chauhan
India’s IPO pipeline, including domestic and international companies, is projected to raise a record $20 billion over the next year – likely making it along with Hong Kong “the world’s most active equity capital market,” Harish Raman, Citi’s head of ECM execution and solutions for Asia-Pacific, told The Economic Times.
The Gujarat center is not yet perceived to be in the top tier. In the most recent Global Financial Centres Index (GFCI), published in September by Z/Yen Group of London, the world leaders were New York, London, Hong Kong and Singapore. The next three places were held by U.S. cities (San Francisco, Chicago and Los Angeles), followed by Shanghai, Shenzhen and Seoul.
GIFT City was No. 43 on the list of 120, up three places from the prior survey. Mumbai, at No. 46, and New Delhi, No. 54, each rose six places.
Though regarded as an emerging market, India is the biggest in the world in terms of equity derivatives contracts traded. According to the Futures Industry Association, growth was spurred by the 2019 introduction of weekly-expiring contracts, replacing the traditional month-end expiration. Equity index options volumes on the NSE and BSE India more than doubled between the second quarters of 2023 and 2024. A February 2024 peak in notional futures and options turnover was six times that at the start of 2022.
NSE’s Nifty and Bank Nifty index options dominate daily activity, driven by retail traders, aided by smartphone apps and social media.
Nilesh Jain, head of equity technical and derivatives research at Mumbai-based Centrum Broking, said both the scale and the risks are worth watching. The growth figures notwithstanding, India “still trails global hubs like the U.S. in product range and market maturity.” SEBI rulemaking “aims to curb excessive speculation, bringing more balance to volumes and risk.”
A decline in Indian equity options was a major factor in global exchange-traded derivatives volumes falling 42.5% year-over-year in this year’s first quarter, FIA said. From 16 billion contracts in October 2024, volumes on India’s two main derivatives exchanges plunged to 4 billion in March 2025.
Measures ranging from tripling the minimum contract size to restricting weekly options listings were imposed, as SEBI’s data showed that 90% of active retail traders were losing money. The cooling effect may be a price to pay for lomger-run market resilience.
SEBI, meanwhile, faced off against the U.S.-based proprietary trading firm Jane Street for alleged manipulative expiry-day trading in Bank Nifty derivatives. Jane Street was barred from domestic markets, and an estimated Rs. 4,843 crore (about $570 million) in what was considered unlawful gains was frozen. Jane Street defended its practices as “basic index arbitrage.”
The episode illustrated tension between maintaining regulatory discipline and business-friendly policies.
“India will likely stay on top in volumes, but its journey will be shaped by strict rules and a heavy retail involvement,” Jain said. “While new products will come, matching global variety will take time. Long-term success will depend on balancing innovation and investor protection.”
If regulation serves as a brake, technology has been an accelerator.
Shridhar Sheth of Trading Technologies
Shridhar Sheth, executive vice prsident and managing director, engineering and India, Trading Technologies International (TT) anticipates a shift in market dynamics: “Growth in the last five years was driven by retail participation. The next five years will be driven by institutional clients and tech-enabled proprietary trading firms. The macroeconomic growth that India is witnessing coupled with geopolitical uncertainties necessitates more sophisticated risk management.”
“When we connect the TT platform to Indian exchanges,” Sheth continued, “we will make the exchanges available at the click of a button to more than 1,100 of our clients through our partnership with trading members. These are hedge funds, prop firms, commodity trading advisors, brokers and banks.”
That would bring new liquidity as well as easier access to India “with exceptional risk controls,” as Sheth put it.
Two slices of the Global Financial Centres Index ranking (GFCI 38, September 2025).
Whether it is a growing pain or an indicator of comparability with mature markets, SEBI has sounded the alarm on cyber, third-party and other tech-related risks. Speaking this month at Mumbai’s Global Fintech Fest, SEBI chairman Tuhin Kanta Pandey pointed to the August 2024 Cybersecurity and Cyber Resilience Framework, prescribing “measures to ensure that regulated entities remain equipped with adequate cyber resiliency to withstand, reapond to and recover from cyber threats effectively.”
“Resilience is not a one-time achievement,” said Pandey, as reported in The Times of India. “It’s a continuous process of learning, adapting and anticipating.”
“A key difference between hubs like Dubai and India is that India is a large domestic market while Dubai acts as a routing hub for offshore trading or cross listing of international products,” TT’s Sheth observed. “Owing to exceptionally busy domestic equity and derivatives markets, Indian exchanges have state-of-the-art infrastructure to support large-volume trading activity with very low latency. Only a handful of exchanges, primarily options exchanges in developed countries, are faster.”
It was noted in September’s GFCI report that regulation remains a core competitive component for financial centers. The importance of predictability and quality of regulation underscores that regulatory clarity is imperative for India’s hub ambitions.
Another differentiator, said Sheth, is that transaction and capital-gains taxes are higher in India than in some emerging jurisdictions. “But GIFT City is narrowing that gap meaningfully. All major names in India are very liquid, and there is significant depth in derivatives markets. However, back-dated contracts could do better.”
Reflecting established-market trends, private credit is booming. Apollo Global Management, for one, is seeking to double assets under management in India, to $4 billion, within three years.
“The market has grown so quickly in size and complexity that regulations and risk controls often lag behind,” Jain said. “This creates a constant back-and-forth, where regulators usually step in only after new risks have already appeared.”
Sheth added that cross-border barriers, from foreign exchange rules to capital controls, are obstacles, and “a more liberalized framework to invest or trade internationally is key to integrate India with global markets . . . India also needs to have a more thriving corporate bond market with an efficient credit rating ecosystem,” to encourage flows into fixed income.