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Strategic Management and Corporate Finance · An Overview on Listing and Issuance of Securities in International Financial Services Centre

Section 31 IFSCA Act: Power to Modify Other Enactments

Updated 11 October 2026 · Fact-checked

Section 31 of the IFSCA Act, 2019 lets the Central Government, by notification, direct that a provision of another Central Act, or its rules, regulations or notifications, does not apply to financial products, services or institutions in an IFSC, or applies with specified exceptions, modifications and adaptations. A draft must first be laid before Parliament.

Understand Power to Modify Other Enactments for IFSCs

An International Financial Services Centre (IFSC) is meant to compete with global financial hubs. Many Indian laws, such as the Companies Act, 2013, were written for the domestic market. Applying them unchanged could make IFSC business slower or costlier.

Section 31 solves this. It gives the Central Government a power to relax or tailor other Central laws for IFSCs. It does not change the laws for the rest of India. The change only operates inside the IFSC, and only for the products, services or institutions the notification names.

The power has two forms. Under clause (a), the Government can direct that specified provisions shall not apply (a full exemption). Under clause (b), it can direct that they apply with exceptions, modifications and adaptations (a tailored application). The notification must specify the provisions affected. The power covers the provisions of a Central Act, the rules or regulations made under it, and any notification, order or direction issued under it. It excludes the provisions relating to making of rules or regulations.

There is a parliamentary check. Under sub-section (2), every notification proposed to be issued must be laid in draft before each House of Parliament, while it is in session, for a total of thirty days. This may be in one session or in two or more successive sessions. If, before the expiry of the session immediately following, both Houses agree in disapproving it, the notification is not issued. If both agree on a modification, it is issued only in that modified form.

Note how this differs from other powers in the Act. Section 31 is exercised by the Central Government, not by IFSCA. It operates through notification, not through regulations under Section 28. It sits alongside Section 13, where IFSCA exercises the powers of the sector regulators in the IFSC.

Key rules to remember

Power under Section 31(1)
Central Government + notification → (a) non-application, or (b) application with exceptions, modifications and adaptations
Covers other Central Acts, their rules, regulations, notifications, orders and directions, except provisions relating to making of rules or regulations.
Scope of effect
Only financial products, financial services or financial institutions, as the case may be, in an IFSC
The notification does not change the law outside the IFSC.
Parliamentary scrutiny, Section 31(2)
Draft laid before each House for 30 days (one session or successive sessions) → no issue, or issue in modified form, if both Houses agree
Both Houses must agree. One House alone cannot stop or change the notification.
Who exercises it
Central Government, not IFSCA
IFSCA's regulation-making power is Section 28. Section 31 is a different power.

How to solve Power to Modify Other Enactments for IFSCs questions

Use this method for any case or theory question on how another law applies in an IFSC.

  1. 1Identify the enactment in question, for example the Companies Act, 2013, and the activity or entity, for example a financial institution in an IFSC.
  2. 2Confirm the entity or product is in an IFSC, since the Act applies to IFSCs set up under Section 18 of the Special Economic Zones Act, 2005 (Section 2).
  3. 3State Section 31(1): the Central Government may notify non-application or application with exceptions, modifications and adaptations.
  4. 4Check whether a notification actually exists for that provision. Without one, the general law continues to apply.
  5. 5Check the form: was a draft laid before Parliament under Section 31(2)? Mention the thirty-day period and the effect of both Houses disapproving or modifying.
  6. 6Apply the notification to the facts. Note that it covers only the financial products, services or institutions it names, and only inside the IFSC.
  7. 7Conclude clearly: provision does not apply, applies as modified, or applies unchanged. Add a compliance point, such as checking the latest notification before drafting.

Quickest way: Four-line answer frame

When to use it: Short theory questions or the first paragraph of a case answer when time is tight.

  1. Who: the Central Government, by notification, under Section 31.
  2. What: non-application, or application with exceptions, modifications and adaptations, of other Central laws.
  3. Where: financial products, services or institutions in an IFSC only.
  4. Check: draft laid before both Houses for thirty days; issued as modified if both agree.

Common mistakes in Power to Modify Other Enactments for IFSCs

  • Saying IFSCA issues Section 31 notifications.

    IFSCA dominates the Act, so students assume it holds every power.

    Fix: Remember Section 31 says the Central Government. IFSCA makes regulations under Section 28.

  • Saying the exemption applies to all companies in India.

    Students forget the territorial limit.

    Fix: Write that it applies only to financial products, services or institutions in an IFSC.

  • Assuming a law is automatically relaxed in an IFSC.

    Students mix up the power with its exercise.

    Fix: The relaxation exists only if a notification specifies it. Say you must check the notification.

  • Forgetting the parliamentary draft requirement or saying one House can block it.

    Students recall the thirty days but not the both-Houses condition.

    Fix: State that both Houses must agree in disapproving or modifying the draft.

  • Describing only exemption and missing modification and adaptation.

    The word relaxation suggests only removal of a rule.

    Fix: Always give both limbs: clause (a) non-application and clause (b) application with exceptions, modifications and adaptations.

  • Claiming the power covers the provisions on making rules or regulations.

    Students read the power as unlimited.

    Fix: Quote the carve-out: provisions relating to making of rules or regulations are excluded.

Worked examples

Example 1

The Central Government proposes a notification under the IFSCA Act, 2019 that modifies how a provision of a Central Act applies to a financial institution in an IFSC. Explain the procedure it must follow before the notification is issued.

Show the solution
  1. Source of power: Section 31(1) allows the Central Government to direct, by notification, that specified provisions do not apply, or apply with exceptions, modifications and adaptations, to financial products, services or institutions in an IFSC.
  2. Procedure: under Section 31(2), a copy of the notification proposed to be issued must be laid in draft before each House of Parliament while it is in session.
  3. Period: the draft stays before Parliament for a total of thirty days, in one session or in two or more successive sessions.
  4. Outcome: if, before the expiry of the session immediately following, both Houses agree in disapproving it, the notification is not issued.
  5. If both Houses agree on a modification, it is issued only in that modified form. Otherwise it can be issued as drafted.

Answer: The Central Government must lay the draft before both Houses for thirty days. It issues the notification as proposed unless both Houses agree to disapprove it (then it is not issued) or to modify it (then it is issued only as modified).

Example 2

Arjun Finserve Ltd runs a financial services unit in an IFSC. A director asks whether a provision of the Companies Act, 2013 can be relaxed for the unit, and who can do it. Advise.

Show the solution
  1. Provision: Section 31 of the IFSCA Act, 2019 lets the Central Government modify the application of other Central Acts for financial products, services or institutions in an IFSC.
  2. Facts: the unit is in an IFSC and offers financial services, so it falls within the scope of the power.
  3. Who decides: the Central Government, by notification, not IFSCA and not the company.
  4. Form: it may direct non-application of the provision, or application with exceptions, modifications and adaptations, after the draft has passed through Parliament under Section 31(2).
  5. Compliance point: the relief exists only if a notification specifies that provision. The company should check the notification and follow its terms.
  6. Limit: the relaxation covers only the IFSC unit and only what the notification names.

Answer: Yes, relief is possible, but only if the Central Government has notified it under Section 31 for the relevant provision. The company should check the notification and comply with it as notified. Without one, the Companies Act provision applies as usual.

Exam tips

  • Quote the words exceptions, modifications and adaptations. Examiners look for them.
  • Name the authority correctly: Central Government for Section 31, IFSCA for regulations under Section 28.
  • In case questions, write provision, facts, then conclusion, and include the point to verify the current notification.
  • Contrast Section 31 with Section 13, where IFSCA exercises the powers of sector regulators in the IFSC.
  • Mention the thirty-day draft laying and the both-Houses condition. It is a common mark-earning detail.

Practice questions from An Overview on Listing and Issuance of Securities in International Financial Services Centre

Power to Modify Other Enactments for IFSCs in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Power to Modify Other Enactments for IFSCs: frequently asked questions

What does Section 31 of the IFSCA Act, 2019 do?

It lets the Central Government notify that provisions of other Central Acts, and their rules, regulations, notifications, orders or directions, do not apply in an IFSC or apply with exceptions, modifications and adaptations. It covers financial products, services and institutions in the IFSC.

Does the Companies Act apply to IFSC companies?

It applies unless the Central Government has notified otherwise under Section 31 for the relevant provision. Where a notification exists, the Act applies as notified. Always check the current notification.

Is Parliament's approval needed for a Section 31 notification?

Not approval as such. The proposed notification is laid in draft before each House for thirty days. It is not issued if both Houses agree in disapproving it, and is issued as modified if both agree on a modification.

Can Section 31 change the rule-making provisions of other Acts?

No. The power excludes the provisions relating to making of rules or regulations.