GIFT City & IFSC – An Overview
India's 1st and only approved International Financial Services Centre
GIFT City is a Global Financial and IT Services Hub. It facilitates cross-border financial transactions to support international trade, boost domestic market activity, and re-route foreign capital through a regulated and transparent platform in India.
International Financial Services Centre (IFSC)
Gift City- Strategic Location
Gift City- Infrastructure
International Financial Services Centres Authority (IFSCA)
IFSC Business Highlights
Banking Assets
USD ($) 70.93 Bn
(as on Sep 2024)
Cumulative Banking Transaction
USD ($) 91.29 Bn
(During Jul–Sep 2024)
Cumulative Derivatives Trade (including NDF)
USD ($) 107.15 Bn
(Sep 2024)
Monthly Turnover (IFSC Exchanges)
USD ($) 101.99 Bn
(Sep 2024)
Cumulative Debt Listing on Exchanges
USD ($) 63.90 Bn
(Sep 2024)
Aggregate Open Interest of all Derivatives Contracts
USD ($) 15.97 Bn
(Month end Sep 2024)
No. of Fund Management Entities
128
(upto Sep 2024)
No. of Funds/Schemes Registered
168
(upto Sep 2024)
Total Commitments Raised
USD ($) 12.13 Bn
(upto Sep 2024)
IFSCA (Fund Management) Regulations, 2022
Regulating Fund Manager v. Fund
A paradigm shift: Regulation of Fund Managers as compared to regulation of Funds under the earlier regime
Regulatory Oversight
Fund Manager to obtain registration from IFSCA and get license for Fund Management Entity (FME)
Risk-based Approach
Three categories of FME have been notified depending on the extent of regulatory oversight
Fund Management Entity (FME)
- Authorised FME
- Registered FME (Non–Retail)
- Registered FME (Retail)
Funds / Schemes
- Venture Capital Schemes
- Restricted Schemes (non-retail)
- Retail Schemes
Specific Fund Structures
- Exchange Traded Funds (ETFs)
- Environmental, Social and Governance (ESG)
- Investment Trusts
- Special Situation Funds
Other Fund Management Activities
- Portfolio Management Services
- Family Investment Funds
- Innovation Sandbox and Fund lab
Advantages of GIFT IFSC
Lower cost of setting up/maintenance offshore Fund/Feeder Fund/Manager Entity
No GST on Management Fees (Current GST Rate – 18%)
Corporate Tax exemption for income from Business in IFSC. 100% Exemption for 10 consecutive years out of 15 Years
No Concentration Norms (Single Security Investment permissible – GIFT Cat II & III)
No Cap Leverage (Domestic AIF Leverage Cap 2x)
Zero Capital Gain Tax on Equity Derivatives, Bonds & Other than Cash Equity Instruments
Investors
Resident Indian Individuals
Resident Indian individuals have the option to invest in USD terms through the Liberalized Remittance Scheme (LRS) route. However, there is a remittance cap of $250,000 per investor per year.
Indian Entities
Indian entities, such as companies, can engage in Overseas Portfolio Investments (OPI). The OPI should not exceed fifty percent (50%) of the entity's net worth as per its last audited balance sheet. The rules and conditions for OPI are outlined in Schedule III of the Overseas Investment (OI) Rules.
Non-Resident / Global Investors
Non-resident or global investors have the freedom to allocate funds directly from their Global USD Account without any specific limits or restrictions.
Funds in GIFT City
Permissible investors
Foreign investors
No restriction on quantum
Indian investors
Subject to outbound investment/LRS norms (USD 2,50,000 for individuals & 50% of the net worth for corporates)
Permissible investments
India investments through FDI/FPI/FVCI route
Offshore investments
Offshore investments
- Indian securities such as shares, debt, derivatives, MFs
- Indian listed and unlisted companies
- Units of AIFs, LLP, REIT, InvITs etc.
- Offshore securities
- Securities listed on IFSC exchange
- Companies incorporated in GIFT City IFSC
Funds in GIFT City – AIF & Retail Schemes
They typically invest in other than conventional asset classes such as VC, private equity, commodities etc.
Category I
Invest in startups, SMEs, socially desirable sectors
Category II
Residual category
Category III
Deploy diverse or complex trading strategies and leverage including derivatives etc.
Benefits of investing in global equities
Global Diversification
Incorporating global equities can enhance risk-adjusted returns, especially during weak periods in the local market
Access to US Dollar savings
Utilizing annual LRS limits consistently ensures future financial requirements in US dollars are met (e.g.: education, home requirements, inheritance, etc.).
Invest in companies not available in India
Capitalize on trends such as AI, PC, Mobile, Data Center, IoT, Cloud and high-performance computing by investing in companies unavailable in India.
Avoid home-bias
Only ~1% of Indian savings in international equities, often driven by patriotism rather than objective financial analysis.
Access to Global Fund Managers
Invest in a top-rated fund management team globally with a historical record of generating excess returns over the global benchmark.
Why Investments in India through GIFT Route?
No NRE/NRO account required
PAN not mandatory; No TDS
No restriction on repatriation
Access to best of Aditya Birla Sun Life MF/ETF schemes
Ease of Compliance for Foreign Investors (No FPI License required)
Eligible Investors – NRIs and Foreign Investors only
Easier onboarding – Less paperwork