Enabling Sustainable Growth:A Comprehensive Policy Framework for Blended Finance in KIFT City



Within Tomorrowland’s vibrant financial environment, Krypton International Finance TecCity, also known as KIFT City, is a visionary hub of economic opportunity. KIFT City, positioned as the country’s first International Financial Services Centre (IFSC), is purposefully built to incite financial innovation and worldwide investment. With a special combination of cutting-edge infrastructure and legislative incentives, KIFT City has enormous potential to spur previously unheard-of economic growth and development. 

KIFT City’s significance stems from its dedication to promoting financial innovation and acting as a centre for global financial transactions. Being the first of its kind in Tomorrowland, KIFT City hopes to build an ecosystem that draws in international financiers, investors, and companies looking for a supportive atmosphere for growth and innovation.

But in the midst of all of this financial growth, a crucial obstacle has surfaced: creating a solid foundation for blended finance inside the KIFT City ecosystem. A potent strategy for sustainable development is blended finance, a revolutionary mechanism that brings together public, private, and charitable funds to address urgent social and environmental concerns.

Even though blended finance has a lot of potential, KIFT City’s regulatory environment is still developing, which makes it difficult to put into practice. The lack of well-defined protocols and structures customised to the distinct needs of blended finance endeavours presents difficulties for organisations like Tomorrowland’s top non-profit, Green LLC, which is committed to climate finance and sustainable development.

Green LLC envisions maximising KIFT City’s newly built platform to implement a mixed finance model, tackling important climate change challenges. However, the lack of explicit norms and regulatory frameworks inside the KIFT City environment has made navigating this financial landscape a challenging affair.

This policy plan, which complies with the laws that apply to GIFT City in India, aims to solve these issues and unleash the revolutionary potential of blended finance within KIFT City. The main goal is to establish a regulatory framework that promotes responsible, transparent, and sustainable development in KIFT City’s financial sector.                                          .




The scope of this policy proposal is to establish a comprehensive regulatory framework for blended finance within the Krypton International Finance TecCity (KIFT City) ecosystem. It aims to address the challenges hindering the effective implementation of blended finance, particularly in the context of Tomorrowland’s environmental and climate issues. The policy will focus on creating standardized metrics, refining regulatory instruments, and facilitating the formation of impact investment guidelines.


  • Policymakers and regulatory bodies within KIFT City, including the Krypton International Financial Service Center Authority (KFSCA).
  • Financial institutions operating within KIFT City, exploring opportunities in blended finance. Public, private, and philanthropic investors interested in participating in blended finance projects within KIFT City.
  • Non-profit entities, such as Green LLC, dedicated to climate financing and sustainable development in Tomorrowland. Organizations and projects focused on environmental and climate issues in Tomorrowland, seeking innovative financial mechanisms. 
  • Legal and regulatory experts involved in shaping and interpreting financial laws within KIFT City. 
  • Scholars and researchers in the field of finance, sustainability, and environmental law interested in the regulatory dynamics of blended finance in emerging financial centers.
  • Government agencies overseeing financial and environmental regulations in KIFT City.

This policy proposal targets a diverse audience with a stake in the regulatory landscape of blended finance, emphasizing its application in addressing environmental and climate challenges within Tomorrowland through the unique financial opportunities.


  1. The Essence of Blended Finance: 

Blended finance, a transformative mechanism integrating public, private, and philanthropic capital, stands as a potent approach to address pressing social and environmental challenges. It presents a unique opportunity to unlock new avenues of investment, particularly for projects with high social and environmental impact. Within the broader context of KIFT City, the regulatory landscape surrounding blended finance remains in its infancy, posing substantial barriers to its effective implementation.

  1. Navigational Challenges for Green LLC:

Green LLC faces navigational challenges as it strives to address environmental and climatic issues through creative finance methods. Green LLC is a well-known non-profit committed to climate financing and sustainable development in Tomorrowland. Green LLC is collaborating with the recently formed KIFT City to implement a mixed finance model to attempt to combat significant climate change. But Green LLC has found the journey through the KIFT City ecosystem to be quite strenuous. The fundamental cause of the problem is the lack of explicit rules and legislative frameworks designed to meet the particular needs of blended finance ventures in KIFT City.

  1. Impact on Capital Flow and Project Execution:

The regulatory ambiguity within KIFT City inhibits the seamless flow of capital across sectors, impeding the deployment of funds towards projects that integrate financial returns with measurable social and environmental outcomes. Non-profit entities, social enterprises, and impact investors navigating the KIFT City ecosystem find themselves ensnared in a web of regulatory uncertainties. This hindrance diminishes their ability to mobilize resources and execute impactful initiatives, resulting in decreased investor confidence, lack of transparency, and accountability in the ecosystem.

  1. Standardisation Problems:

The lack of standardised reporting procedures and indicators for evaluating the social and environmental effectiveness of blended finance initiatives further complicates matters. For investors, the lack of clear and widely recognised standards for gauging impact increases risks and uncertainties. This consequently serves as a disincentive for them to engage in blended finance activities within KIFT City.

  1. The Urgency for Regulatory Clarity:

Consequently, the full potential of blended finance to drive sustainable development and address pressing societal issues remains largely untapped within the KIFT financial landscape. Recognizing these challenges, the Krypton International Financial Service Center Authority (KFSCA) has taken cognizance of the situation. Various companies and non-profits have represented their concerns to KFSCA, urging the need to address critical gaps and unlock the transformative potential of blended finance within KIFT City.


Reviewing global and Indian jurisprudence on blended finance and impact investment, emphasizing the need for a comprehensive regulatory framework tailored to the unique aspects of KIFT City.

Responsible Party

Krypton International Financial Service Center Authority (KFSCA).

Laws Governing KIFT City in Tomorrowland

KIFT City, Tomorrowland’s first International Financial Services Centre (IFSC), is governed by a set of laws and regulations that facilitate its operations as a global financial services hub. Here’s an overview of the key laws and regulatory frameworks:

  1. Special Economic Zones Act, 2005: KIFT City is approved and regulated under the Special Economic Zones Act, 2005, which provides a favourable regulatory environment for financial services businesses.
  1. International Financial Services Centres Authority (IFSCA): The IFSCA is a unified regulator for securities markets, banking, insurance, and pension funds in the IFSC. It was established in 2020 to oversee the regulatory landscape and tax provisions for KIFT City.
  1. IFSCA Regulations: The IFSCA has issued various regulations to govern the operations of financial institutions within KIFT City, including regulations for aircraft leasing and financing, international bullion exchange, global in-house centers, and banking units.


  1. SEBI IFSC Guidelines: The Securities and Exchange Board of India (SEBI) has issued guidelines for capital markets in the IFSC, which are applicable to KIFT City.
  1. MoCI – Special Economic Zone (SEZ) Guidelines: The Ministry of Commerce and Industry (MoCI) has issued guidelines for setting up of International Financial Services Units (IFSUs) in SEZs, which are applicable to KIFT City.
  1. RBI_FEMA and IFSC Banking Units Guidelines: The Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA) have issued guidelines for banking units in the IFSC, which are applicable to KIFT City.

These laws and regulations provide a comprehensive framework for the development and operation of KIFT City as a global financial services hub, attracting overseas financial institutions and fostering a conducive environment for financial services businesses.

In KIFT City:

  1. Foreign Contribution (Regulation) Act, 2010 (FCRA):
    • FCRA regulates the acceptance and utilization of foreign contributions by individuals, associations, and companies. Entities involved in blended finance should be mindful of compliance with FCRA regulations.
  2. Income Tax Act, 1961:
    • Provisions related to tax benefits and exemptions for charitable and non-profit organizations may be relevant to entities engaging in blended finance for social impact.
  3. Companies Act, 2013:
    • Companies engaged in blended finance activities need to comply with the regulations under the Companies Act, which includes provisions related to corporate social responsibility (CSR).
  1. Securities and Exchange Board of India (SEBI) Regulations:
    • Depending on the structure and nature of blended finance instruments, SEBI regulations related to securities and investments may be applicable.


  1. International Financial Institutions (IFIs):
    • Institutions like the World Bank, International Monetary Fund (IMF), and regional development banks often play a significant role in blended finance initiatives. Their policies and guidelines influence the landscape.
  2. Local Financial Regulations:
    • Blended finance initiatives often involve private sector entities, and therefore, compliance with local financial regulations is crucial. These can vary widely from country to country.
  3. Global Reporting Initiative (GRI):
    • GRI provides a global standard for sustainability reporting. Entities involved in blended finance may use GRI guidelines to enhance transparency and accountability in reporting social and environmental impacts.
  4. OECD Development Assistance Committee (DAC) Guidelines:
    • The DAC provides guidelines for the proper reporting of official development assistance (ODA). Blended finance initiatives often involve ODA, and adherence to these guidelines may be relevant.
  5. United Nations Sustainable Development Goals (SDGs):
    • Blended finance projects often align with the SDGs. While not a legal framework, the SDGs provide a global reference for sustainable development priorities.


Objective: The objective of this policy is to establish a robust regulatory framework for blended finance within KIFT City, promoting sustainable development, transparency, and accountability. The policy aims to address the challenges outlined in the statement of the problem through a comprehensive set of solutions.

  1. Regulatory Guidelines and Oversight:

a. Establish precise and unambiguous regulatory rules for KIFT City’s blended finance projects.

b.  To guarantee efficient project oversight, form a Blended Finance Oversight Committee with representatives from the finance, sustainability, and legal fields.

Propose amendments to the Foreign Contribution (Regulation) Act, 2010, Foreign Exchange Management Act, 1999, and Income Tax Act, 1961 to facilitate blended finance transactions. Proposing strategic amendments to the regulatory framework, specifically targeting the Foreign Contribution (Regulation) Act, 2010 (FCRA), Foreign Exchange Management Act, 1999 (FEMA), and Income Tax Act, 1961, is a crucial endeavor in unleashing the full potential of blended finance transactions within the vibrant financial landscape of KIFT City.

The Foreign Contribution (Regulation) Act, 2010, which regulates foreign contributions in India, needs amendments to accommodate blended finance. The amendments should clarify permissible contributions and encourage the inflow of philanthropic and private funds into impactful projects. 

The Foreign Exchange Management Act, 1999, should streamline procedures for foreign investors, allowing them to participate in blended finance projects within KIFT City. 

The Income Tax Act, 1961, should provide tax incentives for investors to engage in projects with high social and environmental impact, creating tax credits for sustainable investments. These amendments aim to promote a conducive environment for both investors and non-profit entities.

Harmonizing these amendments across FCRA, FEMA, and the Income Tax Act is critical. The regulatory framework must strike a delicate balance, offering flexibility for innovative financial structures while maintaining safeguards against potential misuse. Regular consultations with stakeholders, including investors, non-profit entities, and legal experts, are essential to crafting amendments that align with global best practices and cater to the unique requirements of blended finance.

  1. Standardized Metrics and Reporting: 

 a. Define standardized metrics and reporting mechanisms for assessing the social and environmental performance of blended finance projects within KIFT City.

 b. Encourage transparency and accountability through universal impact measurement criteria.

Standardized metrics are essential for evaluating blended finance initiatives, ensuring transparency and comprehensive evaluation. They capture both quantitative and qualitative aspects of impact, such as carbon emissions reduction, community development, and biodiversity preservation. 

Quantitative measures may include carbon emissions reduction, while qualitative aspects might involve assessing empowerment of marginalized communities, livelihood improvements, and advancements in education and healthcare. Standardized metrics foster accountability and comparability, benefiting investors and non-profit entities by providing a clearer understanding of their investments’ effectiveness and enhancing the credibility and transparency of their projects.

Standardized metrics in KIFT City enhance its credibility as a hub for blended finance, aligning with global best practices. This makes it an attractive destination for impact-driven investments, promoting responsible and sustainable financial practices. The development of these metrics ensures a consistent evaluation of impact and positions the city as a leader in responsible financial practices, attracting diverse investors committed to positive social and environmental change.

  1. Investor Education and Engagement: 

 a. Develop educational programs to enhance investor understanding of blended finance and its potential impact within the KIFT City ecosystem.

 b. Provide guidelines for investors seeking social returns, fostering a culture of responsible investment.

The KIFT City ecosystem is aiming to establish clear guidelines for impact funds, ensuring investors can navigate the complex landscape with confidence. These guidelines should provide a transparent framework outlining the criteria for defining impact investments, specifying social and environmental outcomes that qualify a project as impactful. These benchmarks align with the broader mission of blended finance, ensuring investors can understand what constitutes a socially responsible investment. 

The guidelines should also outline the due diligence processes that impact funds need to undertake, evaluating both the financial viability and social and environmental implications of potential investments. This standardized due diligence framework ensures consistency and integrity across impact funds, contributing to the overall credibility of KIFT City as a hub for responsible and sustainable finance.

Impact investment guidelines are essential for KIFT City to attract socially conscious investors and foster a culture of responsible finance. They provide standardized metrics and reporting mechanisms for investors to monitor and measure their investments’ social and environmental performance, fostering transparency and enabling informed decisions. The guidelines should address mechanisms for measuring and verifying impact, acknowledging that impact assessment is an evolving field. Regular reviews and updates based on emerging best practices and global standards ensure KIFT City remains at the forefront of responsible finance. 

These guidelines contribute to the credibility and success of KIFT City’s blended finance initiatives.

Some other solutions include:

  1. Incentivizing Blended Finance:

 a. Introduce regulatory incentives, including tax benefits and regulatory exemptions, to attract investors, non-profits, and social enterprises to participate in blended finance initiatives within KIFT City. 

 b. Implement a streamlined approval process with a single-window clearance mechanism to expedite project approvals.

  1. Capacity Building Programs: 

 a. Launch capacity-building programs for non-profit entities, social enterprises, and impact investors navigating the regulatory landscape within KIFT City.

 b. Focus on impact measurement, project execution, and best practices for executing blended finance initiatives.

  1. Collaboration and Consultation:

 a. Foster collaboration between KIFT City entities and environmental/social organizations to create a supportive ecosystem for blended finance projects.

 b. Introduce public consultation mechanisms to gather feedback on proposed policies, ensuring inclusivity in the decision-making process.

  1. Periodic Review and Revision:

 a. Establish a mechanism for the periodic review and revision of policies to adapt to the evolving landscape of blended finance and address emerging challenges.

  1. International Collaboration:
  2. Explore collaboration with international financial centres engaged in blended finance to benchmark against global best practices and leverage insights for continuous improvement.
  1. Implementation Plan:

 a. Outline a phased implementation timeline for the policy, ensuring a smooth transition and adaptation for stakeholders.

 b. Include capacity-building initiatives and training programs for stakeholders to facilitate effective policy implementation.

  1. Monitoring and Evaluation:

 a. Implement a monitoring and evaluation framework to assess the effectiveness of the policy in promoting blended finance and sustainable development within KIFT City.

 b. Establish key performance indicators for ongoing policy evaluation.


In KIFT City, this policy framework for blended finance is a critical first step towards balancing environmental responsibility with economic growth. This policy seeks to establish KIFT City as a vibrant centre for sustainable development, where financial innovation is in harmony with social and environmental effect, by tackling the regulatory gaps seen in the financial landscape.

This policy’s many solutions, which range from transparent regulations to standardised measurements and investor education, are intended to foster an environment that not only draws in a wide range of stakeholders but also guarantees their informed and active involvement. In order to realise its full potential as a light of economic opportunity and solve urgent societal and environmental concerns at the same time, KIFT City plans to incentivize blended finance activities and collaborate with environmental and social organisations.

The flexibility and adherence to recurrent evaluation and modification of this policy make it resilient, allowing it to remain responsive to the changing blended finance environment. As the leader of the committee driving this effort, we understand that it is our joint duty to support an open, accountable, and long-lasting financial environment in KIFT City.

Through the implementation of this policy, we envision a revolutionary journey in which financial endeavours are seamlessly integrated with social and environmental objectives. This will open up new avenues and propel KIFT City towards a future in which the health of our planet and its inhabitants is inextricably linked to economic prosperity. As a result of cooperative efforts and an unwavering dedication to the values delineated above, KIFT City is well-positioned to emerge as a worldwide model of sustainable finance, demonstrating the significant influence that financial innovation can have on the global community.


  1. Nishith Desai Associates. (n.d.). [LinkedIn post about GIFT City, ESG investing, and blended finance]. LinkedIn. https://www.linkedin.com/posts/nishith-desai-associates_giftcity-esginvesting-blendedfinance-activity-7150697776283033600-nZv_/
  2. Times of India. (2022, September 13). Sustainable finance committee submits report to IFSCA. The Times of India. https://timesofindia.indiatimes.com/business/india-business/sustainable-finance-committee-submits-report-to-ifsca/articleshow/94679124.cms
  3. GIFT Gujarat. (n.d.). [Doing business at GIFT IFSC booklet]. https://assets.giftgujarat.in/downloads/Doing%2Bbusiness%2Bat%2BGIFT%2BIFSC_booklet.pdf
  4. Convergence. (n.d.). Blended finance. https://www.convergence.finance/blended-finance
  5. Times of India. (2022, October 28). GIFT City looks to make three leaps forward. The Times of India. https://timesofindia.indiatimes.com/city/ahmedabad/gift-city-looks-to-make-three-leaps-forward/articleshow/106082150.cms
  6. TheCityUK. (n.d.). [Developing GIFT City into a global services hub]. https://www.thecityuk.com/media/04od4n2k/iukfp-developing-gift-city-into-a-global-services-hub.pdf 
  7. Government of India. (2023, June 5). GIFT City: India’s financial hub for the future. Ministry of Finance. https://www.finmin.nic.in/sites/default/files/GIFT%20CITY%20-%20India%E2%80%99s%20Financial%20Hub%20for%20the%20future%20-%20June%202023.pdf
  8. Reserve Bank of India. (2023). Regulatory framework for GIFT City. RBI. https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=1055
  9. International Finance Corporation. (2022). Blended Finance Handbook: From Concept to Practice. IFC. https://www.ifc.org/wps/wcm/connect/ed8374bf-d49e-4994-8d2f-cd43b91b3695/Blended_Finance_Handbook.pdf?MOD=AJPERES&CVID=lT1A48P
  10. Securities and Exchange Board of India. (2023, August 15). Overview of regulatory framework for GIFT IFSC. SEBI. https://www.sebi.gov.in/sebi_data/attachdocs/feb-2023/1644920931542.pdf
  11. Ahmedabad Stock Exchange. (2022, December 20). Opportunities and challenges in GIFT-City: ASE Publications. https://www.aseindia.org/publications/research-papers/2022/Opportunities-and-Challenges-in-GIFT-City-A-Comprehensive-Analysis.pdf
  12. Institute of Chartered Accountants of India. (2023). Role of accountancy professionals in sustainable finance: A study on GIFT City. ICAI. https://www.icai.org/post/role-of-accountancy-professionals-in-sustainable-finance-a-study-on-gift-city

Written By Sankalp


What is blended finance and why is it important for KIFT City?

Blended finance integrates public, private, and philanthropic capital to address social and environmental challenges. It’s crucial for KIFT City to harness blended finance to drive sustainable development while attracting diverse investors and fostering economic growth.

What are the key challenges hindering the implementation of blended finance in KIFT City?

The regulatory environment in KIFT City is still developing, leading to navigational challenges for non-profit entities like Green LLC. Additionally, there’s a lack of standardized metrics and reporting mechanisms, inhibiting transparency and accountability in blended finance projects.

How does this policy proposal aim to address these challenges?

This policy framework establishes precise regulatory guidelines, forms oversight committees, and proposes amendments to relevant laws to facilitate blended finance transactions. It also defines standardized metrics, encourages investor education, and provides impact investment guidelines to foster a culture of responsible investment.

What are the potential benefits of implementing this policy framework?

By promoting regulatory clarity, transparency, and accountability, this policy framework aims to unlock the transformative potential of blended finance in KIFT City. It can drive sustainable development, attract socially conscious investors, and position KIFT City as a global leader in responsible finance.

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