The International Financial Services Centres Authority (IFSCA) has notified the instrument titled "Notification enabling Operating lease including any hybrid of operating and financial lease of "GPU and connected data centre equipment" as financial product" — Notification No. IFSCA/GN/2026/017, dated 22 October 2026 — specifying Graphics Processing Units (GPUs) and connected data centre equipment as equipment for operating lease, including any hybrid of operating and financial lease, as a financial product in India's International Financial Services Centres (IFSCs). The notification came into force on its publication in the Official Gazette: the Gazette of India, Extraordinary, Part III—Section 4, No. 639, dated 29 October 2026. IFSCA listed the notification on its website on 4 November 2026.
Quick Answer: IFSCA Notification No. IFSCA/GN/2026/017 dated 22 October 2026, in force from Gazette publication on 29 October 2026, makes operating lease — including hybrid operating-and-financial lease — of Graphics Processing Units and connected data centre equipment a financial product in IFSCs, so GIFT IFSC finance companies can now lease AI chips and their directly associated data centre equipment just as they already lease aircraft, ships and oilfield equipment.
In plain business-owner language, the change is this: buying AI computing hardware outright is expensive, and the hardware goes out of date fast. Leasing it instead turns a large upfront bill into regular payments — and until this notification, that leasing route from GIFT City was not open for AI chips. Now it is, for identified GPU equipment and the kit that is dedicated to and directly associated with those GPUs.
What the notification actually does
The notification is short — one operative paragraph plus definitions — and it works through a route created years ago. By Central Government Notification S.O. 5199(E) dated 14 December 2021, operating lease, including any hybrid of operating and financial lease, of such product or equipment as IFSCA may specify was notified as a financial product. Exercising the power under that notification read with section 12 of the International Financial Services Centres Authority Act, 2019, IFSCA has now specified two items of equipment for that purpose: "Graphics Processing Units" and "connected data centre equipment". The notification was signed by Dr. Praveen Trivedi, Executive Director, and carries the advertisement reference [ADVT.-III/4/Exty./408/2026-27].
That is the whole legal effect, and it matters precisely because it is narrow. The notification does not create a new regulator, a new licence category or a new tax break. It adds two entries to the list of equipment whose operating lease counts as a financial product in an IFSC. Everything else — who may carry on the activity, under which framework, and on what prudential terms — continues to be governed by the existing IFSCA frameworks for finance companies and leasing activity. Any reader who needs the full compliance picture for a live transaction should read this notification together with those frameworks, not on its own.
What counts as a GPU — and what counts as connected equipment
The notification defines both terms, and the definitions are deliberately technology-neutral: they are written to survive the next generation of chips, not just today's models.
The two limits in that second definition are the ones to underline. First, the "dedicated to and directly associated with" test: a server, switch or power unit qualifies only where it is tied to the GPUs being leased, not merely because it happens to sit in the same building. Second, the express exclusion: equipment serving the data centre facility as a whole — the building-level plant, in other words — is outside the notification. A lease structure that sweeps in whole-facility equipment would go beyond what this notification specifies, and that boundary is where structuring advice will matter most.
Old position vs new position
Why IFSCA did this — the consultation background
The notification is the final step of a proposal IFSCA put out on 18 August 2026, when it issued a consultation paper on enabling operating lease of GPUs and connected data centre equipment as a financial product in GIFT IFSC, with comments invited by 28 August 2026. The consultation paper's case, in brief, was that AI hardware is costly, supply-constrained and fast to obsolesce: the risk that a chip goes out of date sits better with a leasing company, which is placed to price, manage and remarket it, than with the end user. It also noted that India imports the equipment it uses and holds a small share of global AI-optimised compute capacity — the paper put India's boarded AI GPU capacity at about 38,000 units as of October 2025, expected to reach 1,00,000 by the end of 2026, and estimated that deploying 650,000–700,000 GPUs in Indian data centres over five years could represent about a USD 23 billion investment opportunity. Those are the consultation paper's estimates, not figures in the final notification, and they explain why the regulator moved: leasing is a way to finance that build-out without every operator buying hardware outright.
Readers should keep the status of the two documents straight. The consultation paper argued the case and invited comment; the notification decides it. Where the two differ — most visibly on rack-scale systems, which the final text covers whether or not they are invoiced as one integrated system — the notification prevails.
Who is affected
- Finance companies in GIFT IFSC that carry on leasing activity: they gain a new eligible asset class. The practical question for them is authorisation and framework — confirming that their existing authorisation and the applicable leasing framework cover this equipment, and structuring each lease so the equipment passes the "dedicated to and directly associated with" test.
- Data centre operators and AI infrastructure buyers — cloud operators, colocation providers and businesses building AI capacity: leasing from an IFSC lessor becomes a financing route to consider alongside outright purchase, bank finance and other structures. The benefit being sold is cash-flow shape and obsolescence risk transfer, not a tax outcome — the notification itself says nothing about tax or customs duty.
- Investors and advisers in AI infrastructure: the notification signals that GIFT City intends to be a financing hub for AI hardware, not only for aircraft and ships. For anyone modelling a data-centre build, the leasing route is now a live option to price, rather than a proposal to wait for.
- Equipment suppliers and lessors outside the IFSC: the notification changes the competitive map only at the margin — it enables IFSC-based leasing; it does not restrict leasing done elsewhere, and it does not itself authorise any particular transaction.
What to do next
- If you are an IFSC finance company: check your authorisation and the leasing framework that applies to you before marketing GPU leases; map each proposed lease against the two definitions, and document the "dedicated to and directly associated with" link for every item of connected equipment.
- If you are buying AI capacity: ask the lessor to identify the equipment precisely — identified machines under the lessor's control, not a pool of shared computing time. The consultation paper drew a line between equipment leasing and GPU-as-a-Service; the final notification specifies equipment, so the lease documentation should reflect identified equipment.
- Price the obsolescence point explicitly: the commercial logic of GPU leasing is the refresh cycle. Compare the lease rentals and end-of-term terms against outright purchase plus resale risk, rather than assuming leasing is automatically cheaper.
- Do not assume the tax or customs answer: the notification is silent on customs duty and tax treatment. Those need separate advice for the specific import, lease and lessee structure — NOT CHECKED in this notification, and not to be filled in from general IFSC incentives.
- Watch for the consolidated leasing framework: IFSCA's August consultation indicated GPU leasing would be brought under its consolidated leasing framework with necessary modifications; that framework itself was still in draft at consultation stage. Whether and when a final framework follows is NOT CHECKED in this notification — track IFSCA's circulars, not this notification alone, for operating conditions.
What this notification does NOT do
Three things readers sometimes assume, which the notification does not say. First, it does not state whether a data centre located in India (outside the IFSC) may be the lessee — that question is not addressed in the notification text and is NOT CHECKED here; do not read an answer into it. Second, it does not deal with customs duty on imported GPUs, which the notification leaves silent. Third, it does not set a deadline, a fee, a threshold or a reporting form: there is no compliance date in the notification beyond its Gazette-publication commencement on 29 October 2026. If a future IFSCA circular adds operating conditions for GPU lessors, those will be a separate instrument.
Bottom line for a business owner: if you need AI computing power, you can now ask a GIFT City finance company to own the chips and lease them to you, instead of buying them yourself. If you are the finance company, GPUs are now a product you can offer — provided every piece of kit in the lease is genuinely tied to those GPUs, and not just part of the building.
Frequently asked questions
What is IFSCA Notification No. IFSCA/GN/2026/017? It is IFSCA's notification dated 22 October 2026, in force from Gazette publication on 29 October 2026, specifying Graphics Processing Units and connected data centre equipment as equipment for operating lease, including hybrid operating-and-financial lease, as a financial product in IFSCs.
When did GPU leasing become a financial product in GIFT IFSC? From the notification's publication in the Official Gazette — Gazette of India, Extraordinary, Part III—Section 4, No. 639, dated 29 October 2026. The notification itself is dated 22 October 2026, and IFSCA listed it on its website on 4 November 2026.
Can a GIFT City finance company lease AI chips now? Yes, as a financial product: operating lease, including hybrid operating-and-financial lease, of GPUs and connected data centre equipment is now specified equipment under the S.O. 5199(E) route, subject to the finance company's authorisation and the applicable leasing framework.
What equipment is covered besides the GPUs themselves? Connected data centre equipment — integrated circuits, servers, storage, networking, interconnect and power equipment including server power supply units, and parts and accessories — but only where it is dedicated to and directly associated with the GPUs. Equipment serving the data centre facility as a whole is expressly excluded.
Are rack-scale AI systems covered even if not invoiced as one system? Yes. The final notification covers rack-scale artificial intelligence systems whether or not they are supplied or invoiced as one integrated system, including compute trays, switch trays, CPU and input or output units integrated within a single rack.
Does the notification cover GPU-as-a-Service? The notification specifies equipment for operating lease; it does not mention GPU-as-a-Service. The August 2026 consultation paper distinguished identified-equipment leasing from GPU-as-a-Service, where a cloud provider sells computing time from a shared pool. Do not treat the two as the same thing.
Does the notification give a tax break or customs exemption for GPU imports? No. The notification is silent on tax and customs duty. Any tax or customs treatment must be checked separately for the specific transaction structure.
Sources
- IFSCA Notification No. IFSCA/GN/2026/017 dated 22 October 2026 (official PDF, Gazette of India, Extraordinary, Part III—Section 4, No. 639, dated 29 October 2026): IFSCA official notification PDF
- IFSCA "New Section" listing, entry dated 04/11/2026 (official listing confirming the notification): IFSCA New Section
- IFSCA consultation paper, 18 August 2026 (background and estimates only; proposal, not the final instrument) — via IFSCA's 18 August 2026 press release and consultation listing on the same New Section page.
Note: figures attributed to the August 2026 consultation paper (38,000 GPUs, 1,00,000 by end-2026, 650,000–700,000 GPUs, about USD 23 billion) are the consultation paper's estimates. Points marked NOT CHECKED above are not covered by Notification No. IFSCA/GN/2026/017 and have not been filled in from news reports.
