Two directions of travel
Group agreements run in two directions, and the issues differ:
- The IFSC unit serves the group. A GIC, a GAO or a treasury centre provides services to group entities. The question is whether the services and the recipients fall within the unit's permission.
- The group serves the IFSC unit. A fund manager or other regulated unit uses the parent's research, systems or staff. The question is whether that support is outsourcing under the unit's framework, and whether real decisions are still taken in the IFSC.
Many groups have both. Document each flow separately.
When the unit serves the group: scope
The IFSCA (Global In-House Centres) Regulations, 2025 are the clearest example. A GIC unit:
- provides services in relation to financial products and financial services (regulation 8(1));
- serves entities of its financial institution group that are non-resident and not located in a jurisdiction on the FATF call-for-action list (regulation 8(2));
- may serve group entities in India only for delivery of GIC services from the IFSC, up to 10% of its total revenue for the financial year (proviso to regulation 8(2));
- may not be set up by transferring existing contracts or work arrangements from group entities in India (regulation 8(4)); and
- operates in a specified foreign currency and keeps its balance sheet in one (regulation 11).
The service agreement should list the recipients, the services and the currency in those terms, and should let the GIC monitor and cap India revenue. Treasury centres, GAOs and TechFin units have their own scope rules. See group centres compared.
When the group serves the unit: outsourcing
Where a subsidiary in the IFSC receives research, models, trading or operations support from its parent, that is an arrangement between two legal entities, and the outsourcing provisions of the unit's framework may apply. Where the IFSC presence is a branch, the support moves within one legal person. The firm's view is that this is generally not outsourcing for a branch fund manager, but the IFSC branch must still take and record its own decisions.
Either way, keep the line between inputs and decisions clear. The parent may supply inputs; the KMPs in the IFSC must make the regulated decisions and be able to show it. See the two-entity model and substance.
Matters to settle early
- Scope of services. A schedule that maps each service to the unit's permission or, for services received, identifies which are core regulated functions that must stay in the IFSC.
- Data. Where data is held, who can access it, and the unit's and IFSCA's right to obtain records without delay. See cloud, outsourcing and data location.
- Service levels. Measurable standards, reporting to the unit's board or principal officer, and remedies.
- Termination. Rights to end or vary the agreement if the registration is suspended or surrendered, if IFSCA directs, or on exit; and an orderly hand-back. See exit.
- Pricing. A method that can be defended as arm's length, applied consistently, with the invoice currency matching the unit's foreign-currency mandate.
- Regulatory access. IFSCA may call for information and inspect books and records; subcontracts should allow that.
Transfer pricing
Transactions between the IFSC unit and associated enterprises are priced at arm's length under Chapter X of the Income-tax Act, 2025, including cost-sharing and cost-allocation arrangements. Documentation and an accountant's report are required, and safe harbours and advance pricing agreements are available. Because an IFSC unit may be claiming the section 147 deduction, the tax authorities test whether the profit it reports matches the functions it performs. See transfer pricing for IFSC units.
For a branch, profits are attributed to it as a permanent establishment of the foreign company. Agreements between the branch and a separate Indian group company are priced like any other related-party transaction.