Mumbai, Feb. 20 -- The GIFT City regulator has started asking inactive companies to voluntarily surrender their licences if they do not intend to start a business, according to three people in the know, as India seeks to ensure the international finance hub is not reduced to a paper address. "Entities that remain inactive have been asked about their plans and, where there is no clear intent to operate, they may be persuaded to voluntarily surrender the license," said an official, one of the three people quoted earlier, on the condition of anonymity. All three people quoted didn't want to be identified. In three cases, dormant ventures in the capital markets segment were asked to surrender their licences because of the same reason, the official said. The International Financial Services Centres Authority (IFSCA) seeks to develop Gift City more like Singapore, which requires an active presence of companies, rather than the Cayman Islands and Mauritius, which do not have a strict requirement of having people and an office. "With more entities getting registered, the authority wants to ensure this doesn't get diluted and that registrations don't become just paper setups," said Rohit Jain, managing partner at Singhania and Co. Of the 1,034 entities registered with the GIFT International Financial Services Centre (GIFT IFSC), 674 are in the capital markets sector as of September 2025, according to the regulator's quarterly bulletin. Capital market entities include fund management entities, funds, brokers, clearing members, and others. The others cover fintechs, banks, aircraft and ship leasing ventures, among others. Entities are expected to begin business within a year, a practice that is not unique to IFSC, as other regulators also follow up with licensees that remain dormant, said Shikhar Kacker, partner at Khaitan & Co. In the past, regulators have engaged with entities that made initial investments but later became inactive, and IFSC is now seeking to ensure that only operational entities retain licences while inactive ones are asked to surrender them, Kacker said. Queries emailed to the IFSCA did not elicit a response until press time. The substance requirements in the Cayman Islands and Mauritius are much more lenient than those in GIFT City and Singapore. The Cayman Islands does not require the investment manager to be based there and has minimal economic substance obligations, said Paridhi Agnihotri, chief manager-product at Dovetail, a fund administrator in GIFT City....