GIFT City: India’s gateway for global fund access

India has long aimed to be a major player in global finance. Indian fund managers continue to seek global investors, driven by India’s growth, digital push, and smoother regulations. As Indian asset managers began to reach out to investors beyond borders, the need for a homegrown, globally connected financial hub evolved. For years, Indian asset managers relied on offshore centres like Singapore or similar offshore options to launch global funds. These locations, although popular, presented challenges: complex regulations, high costs, and limited control. India lacked a domestic option that met global standards. All that changed with GIFT City.

Why GIFT City was the missing link

GIFT City is India’s first International Financial Services Centre, which is turning that vision into reality, offering a powerful platform to launch and manage global investment funds with ease and efficiency. Built to streamline cross-border finance and fund management within Indian jurisdiction, it is India's equivalent of hubs like Mauritius, Singapore, or Luxembourg, but with many of the tax and regulatory benefits of an offshore zone. This setup addresses a crucial need by delivering a secure, regulation-driven, and cost-effective space for financial services. With strong governance and investor-friendly policies at its core, GIFT IFSC allows fund managers to operate globally, without having to go offshore. Here is India’s answer to the need for a truly global fund domicile at home.

What makes it work

To put it simply, imagine being a chef wanting to serve global dishes, but local rules limit your ingredients and methods. Now, picture a space where you’re free to use global standards, source the best ingredients, and serve a global clientele, with fewer restrictions and lower costs. That’s the GIFT City advantage in financial terms. It removes many of the hurdles Indian fund managers traditionally faced when tapping global markets.

One key advantage is tax neutrality; non-residents don’t pay capital gains tax on some securities. Furthermore, there are concessions on taxation for dividends from IFSC. Add to that an easier setup process, all thanks to single-window clearance and relaxed FEMA norms. Oversight is simplified too. Whether it's capital markets, banking, insurance, or asset management, the IFSC Authority (IFSCA) acts as the sole regulator for all financial activities in GIFT City, thus creating a unified and consistent regulatory environment. With USD-denominated options and seamless repatriation, GIFT City is tailor-made for global investors and forward-looking fund managers.

An India-based, globally scalable solution

GIFT City offers Indian asset managers a robust platform to establish various funds, including Alternative Investment Funds (AIFs), Mutual Funds, and Exchange-Traded Funds (ETFs). This flexibility enables them to cater to a diverse range of investment strategies and investor preferences. Recent regulatory changes have made GIFT City even more appealing with SEBI’s permit for full NRI and OCI participation in FPIs based in GIFT City. This change opens new avenues for the Indian diaspora to invest in India's growth story through a regulated and efficient framework.

Why it matters for investors

GIFT City's offshore in function but onshore in location features provide investors with the best of both worlds: India-focused opportunities combined with global-quality safeguards. Since many of these funds are USD-denominated, global investors don’t have to worry about rupee volatility eating into their returns. What sweetens the deal is the tax structure; dividends received from IFSC units are taxed at a concessional rate of just 10% (plus surcharge and cess), while interest income earned by NRIs on specific bonds also enjoys favourable tax treatment. This is significantly lower than typical domestic rates. With a strong regulatory framework under IFSCA and a transparent investment ecosystem, GIFT City gives NRIs and global investors a safe, efficient, and forward-looking way to tap into Indian markets, without the usual currency or compliance headaches.

Gift City is more than just a tax-friendly zone; it’s a bold structural shift in India’s financial landscape. By combining global standards with local expertise, it opens up fund management to the world, making India more accessible, efficient, and attractive for global capital. The future of investing starts here.

Views expressed are personal. The author is the founder and CEO of TNBG Capital Advisors.