IFSC
An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders. London, New York and Singapore can be counted as global financial centres. Many emerging IFSCs around the world, such as Shanghai and Dubai, are aspiring to play a global role in the years to come. An expert panel headed by former World Bank economist Percy Mistry submitted a report on making Mumbai an international financial centre in 2007. However, the global financial crisis that unfolded in 2008 made countries including India cautious about rapidly opening up their financial sectors.

Services of IFSC
—Fund-raising services for individuals, corporations and governments.
—Asset management and global portfolio diversification undertaken by pension funds, insurance companies and mutual funds.
—Wealth management.
—Global tax management and cross-border tax liability optimization, which provides a business opportunity for financial intermediaries, accountants and law firms.
—Global and regional corporate treasury management operations that involve fund-raising, liquidity investment and management and asset-liability matching.
—Risk management operations such as insurance and reinsurance.
—Merger and acquisition activities among trans-national corporations.

Pre- Requisites for IFSC
IFSCs such as Dubai International Financial Centre and Shanghai International Financial Centre, which are located within SEZs, have six key building blocks:
—Rational legal regulatory framework.
—Sustainable local economy.
—Stable political environment.
—Developed infrastructure.
—Strategic location.
—Good quality of life.

Location of IFSC within SEZ
The SEZ Act 2005 allows setting up an IFSC in an SEZ or as an SEZ after approval from the central government. Since India has many restrictions on the financial sector, such as partial capital account convertibility, high SLR (statutory liquidity ratio) requirements and foreign investment restrictions, an SEZ can serve as a testing ground for financial sector reforms before they are rolled out in the entire nation. Apart from SEZ-related incentives, as per the SEZ Act, there is an exemption from the securities transaction tax levied under Section , 2004, in case taxable securities transactions are entered into by a non-resident through an IFSC.