"GIFT has been announced in the Budget and the timeframe has also been given, effective April 1. We are in constant touch with RBI," Sebi Chairman U K Sinha said here on Friday.
"RBI and Sebi will come out with formulations before April 1," he added.
Finance Minister Arun Jaitley had announced in the Budget last month that India's first IFSC would be set up in GIFT City in Gujarat.
Sinha said there are some challenges and discussions are continuing to resolve them.
"There are some challenges... How do you treat this territory? Is it an Indian territory or foreign territory in the technical term. Will Foreign Exchange Management Act (FEMA) apply or not? All those things are there.
"We are in the process (of discussion), I'm not in a position to disclose the final outcome except that it would be out before April 1," Sinha said.
Presenting the Union Budget for 2015-16, Jaitley had said that appropriate regulations for IFSCs would be issued in March, which would be on the lines of global financial centres of Singapore and Dubai.
"Even though India produces some of the finest financial minds, including in international finance, they have few avenues in India to fully exhibit and exploit their strength to the country's advantage," he had said.
Under the new regime, rules and regulations differ from those applicable outside these IFSCs.
"GIFT in Gujarat was envisaged as IFC (International Finance Centre) that would actually become as good an IFC as Singapore or Dubai, which, incidentally, are largely manned by Indians.
"The proposal has languished for years. I am glad to announce that the first phase of GIFT will soon become a reality. Appropriate regulations will be issued in March," Jaitley had said.
GIFT Company Ltd's MD & Group CEO Ramakant Jha said IFSC regulations is a much needed step to save billions of dollars worth financial services business that India is losing out to other global hubs.
Gujarat International Finance Tec-City (GIFT City) would be the country's first IFSC, with which top bourses BSE and NSE have already signed MoUs for setting up international exchanges there.
The move is expected to capture an estimated Rs 1,334 crore per day or Rs 2 lakh crore per year worth of trading in rupee derivatives that currently goes to locations outside India.