GIFT City: A Comprehensive Investment Guide for NRIs and OCIs

What if you could bridge the gap between domestic investing and global markets—all from a single platform?

That’s precisely the promise of Gujarat International Finance Tec-City (GIFT City), India’s first International Financial Services Centre (IFSC).

Located between Ahmedabad and Gandhinagar, GIFT City mirrors the infrastructure and regulations of top global hubs like Dubai’s DIFC.

But why have NRIs and OCIs taken notice?

And how can you make the most of this opportunity?

This comprehensive guide walks you through:

1. What GIFT City Funds Really Are
2. Key Advantages That Appeal to Global Indians
3. Eligibility and Step-by-Step On boarding
4. Core Investment Products: Which Suit Your Goals?
5. Deep Dive into GIFT City Mutual Funds
6. Unlocking Tax Efficiencies
7. Understanding Potential Risks
8. Comparing GIFT City with Traditional NRI Routes
9. A Practical Case Study: Building a ₹2 Crore Retirement Plan
10. Conclusion: Why a CFP Can Be Invaluable

1. What Are GIFT City Funds—and Why Should You Care?

Have you ever wished for an investment vehicle that transcends borders without the red tape?

GIFT City funds are mutual funds domiciled within the IFSC, regulated by the International Financial Services Centres Authority (IFSCA).

They differ from standard Indian mutual funds in three critical ways:

• Offshore Structuring: GIFT City funds operate under IFSCA rules, offering global asset allocations similar to funds based in Singapore or Luxembourg.
• Multi-Currency Denomination: You can subscribe in USD, EUR, GBP, and other major currencies—bypassing costly rupee conversions.
• Tax-Neutral Environment: Select income streams (dividends, capital gains from IFSC-listed securities) are exempt from Indian taxes.

In effect, these funds allow you to build a truly global portfolio from your laptop—no foreign brokerage accounts required.

2. Top Benefits: Why NRIs Are Flocking to GIFT City

What makes GIFT City so compelling? Consider these advantages:

1. Tax Efficiency: No TDS on dividends, zero GST/STT/CTT, and concessional bond tax rates (4–9%).
2. Global Diversification: Invest across multiple markets and sectors, reducing home-country bias.
3. Currency Flexibility: Choose your base currency to hedge against INR depreciation.
4. Simplified Compliance: One regulator—IFSCA—handles approvals, reporting, and audits, unlike the domestic mix of RBI, SEBI, and FEMA.
5. Professional Management: Access fund managers with global track records and sophisticated strategies.
6. Easy Repatriation: 100% of principal and returns can be transferred back home without RBI hurdles.
7. Innovative Products: From ESG-themed Global Equity funds to structured credit AIFs—GIFT City introduces next-generation offerings.

Isn’t it time you asked whether your investments could work harder?

3. Ready to Invest? Who Qualifies and How to Get Started

Eligible Investors: Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), Foreign Portfolio Investors (FPIs), Foreign Institutional Investors (FIIs), and Qualified US Persons (QUSPs).

Minimum Investment Requirements:

• It is a regulatory requirement for schemes with minimum investments below USD 10,000 to be listed on a stock exchange.
• However, currently, there are no GIFT City mutual fund schemes with such low minimums. The minimum investment for these funds typically starts at USD 150,000.

Step-by-Step On boarding:

1. Digital KYC: Upload passport, overseas address proof, and NRE/NRO/Foreign Currency Account (FCA) details.
2. Choose Your Channel: Direct via the AMC’s portal, through the IFSC bank’s NRI desk, or a SEBI-registered financial advisor.
3. Fund Transfer: Use your NRE/NRO/FCA to remit funds—choose between INR or foreign currency based on product requirements.
4. Investment Setup: Select funds or mandates, set up Systematic Withdrawal Plans (SWP) or Systematic Investment Plans (SIP), and start monitoring via a single dashboard.
5. Ongoing Engagement: Receive quarterly fund factsheets, NAV alerts, and IFSCA disclosures to stay informed.

These steps ensure a smooth entry into GIFT City’s ecosystem—no guesswork required.

4. Exploring Core Investment Products—Which One Fits Your Goals?

i.) Offshore Banking & Foreign Currency Term Deposits

If safety and liquidity top your list, consider foreign currency term deposits offering 4–5% p.a. in USD and 1–2% in EUR. Ideal for your emergency fund or short-term goals, these deposits preserve capital while earning respectable yields.

ii.) Global Equities & Bond Trading Platforms

Platforms like India INX and NSE IFSC function up to 22 hours a day, letting you trade US tech stocks, European bonds, and ETFs with T+1 settlement. Want to follow global markets in real time? This is your gateway.

iii.) GIFT City Mutual Funds & Feeder Schemes

Feeder funds invest in global master funds, providing exposure to themes like clean energy, healthcare innovation, or frontier markets. However, the minimum investment for these schemes is generally not as low as USD 10,000. Instead, the typical entry point starts around USD 150,000, reflecting regulatory requirements and fund structures.

iv.) Portfolio Management Services (PMS) & Alternative Investment Funds (AIFs)

For a tailored strategy, PMS and Category III AIFs enable concentrated equity arbitrage, long-short bets, private equity, real estate, or structured credit. Note the higher minimum of USD 150,000.

v.) Real Estate Investment Trusts (REITs) & Infrastructure InvITs

Own a slice of Indian commercial real estate or infrastructure projects with ticket sizes from USD 25,000—no landlord headaches, just regular distributions linked to rental or project cash flows.

vi.) Specialized Insurance & Reinsurance Solutions

Offshore ULIPs, captive insurance vehicles, and reinsurance-linked securities offer currency-hedged life cover and efficient estate planning. Looking for a creative wealth-transfer tool? Explore these structures.

Which product aligns best with your financial landscape?

5. A Closer Look at GIFT City Mutual Funds: Structure, Currencies, and Strategy

Regulatory Framework: IFSCA consolidates banking, securities, insurance, and pension regulations under one roof—ensuring global audit and risk standards.

Currency Options: Choose between hedged or unhedged share classes to manage forex risk. Want currency gains? Go unhedged. Prefer stability? Opt for hedged.

Fund Manager Strategies:

• Global Macro: Top-down allocations across markets based on economic cycles.
• Quantamental: Blend of algorithmic factor models and stock-specific research.
• Fixed Income: Strategies across global yield curves, credit spreads, and duration management.

These options provide a professional toolkit to navigate market cycles and deliver robust returns.

6. How to Keep Uncle Sam (and Uncle India) Happy: Tax Benefits Explained

Benefit	GIFT City IFSC	Traditional India
Dividend Distribution Tax (DDT)	Nil	10% pre-2020, 0% now
TDS on Dividends	Nil	10% for NRIs
Capital Gains (IFSC-listed)	Exempt under Sec. 47(v)	15% LTCG beyond ₹1L
Interest on IFSC Loans	Tax-free under Sec. 10(15)	Taxable at slab rates
GST / STT / CTT / Stamp Duty	Nil	Applicable
Bond Income Tax	4% before Jul ’23; 9% after	20% without indexation

These tax breaks sharply enhance your net returns—especially compared to domestic options.

7. What Could Go Wrong? Key Risks to Consider

• High Ticket Sizes: Since most GIFT City funds require a minimum investment of around USD 150,000, they may not be accessible to everyone.
• Liquidity Constraints: AIFs and PMS may have lock-in periods—maintain liquidity via money market funds.
• Currency Volatility: Dollar or euro swings can amplify losses; hedged share classes help mitigate this.
• Regulatory Evolution: As a new IFSC, rules may shift—maintain flexibility and diversify across products.

Understanding these risks is crucial for crafting a resilient portfolio.

8. GIFT City vs. Traditional NRI Routes: A Side-by-Side Comparison

Metric	GIFT City IFSC	LRS (Domestic Route)
Asset Universe	Global equities, bonds, AIFs, REITs, PMS	Domestic equities, debt, FDs
Tax Efficiency	Very high (no TDS/GST, concessional rates)	Moderate (TDS, STT apply)
Currency Exposure	Multi-currency options	INR only
Compliance	Single-window IFSCA	SEBI + RBI + FEMA
Minimum Investment	USD 150k+ for PMS/AIF; USD 10k for feeder	INR 5k+ (MF SIP)
Liquidity	Product-dependent	High

This comparison highlights why GIFT City can outpace LRS-based investing for many NRIs.

9. Real-Life Case Study: Structuring a ₹2 Crore Retirement Plan

Imagine converting ₹2 Crore to USD 250,000 and aiming for ₹10 Lakh/year (6% withdrawal), rising 6% annually:

• 30% (USD 75k) Global Equity Feeder → 12% return
• 30% (USD 75k) Global Debt Fund → 8% return
• 20% (USD 50k) USD Term Deposit → 5% return
• 20% (USD 50k) USD Liquid Fund → 4% return

First-Year Results:

• Returns: USD 9k (Equity) + 6k (Debt) + 2.5k (FD) + 2k (Liquid) = USD 19.5k
• Withdrawal: USD 15k → Net gain of USD 4.5k

Even after inflation adjustments, this balanced approach supports a sustainable retirement income for 30+ years.

10. Conclusion: Why a CFP Can Be Your Best Ally

GIFT City opens doors to global diversification, tax optimization, and innovative products—but it also introduces complexity in currencies, regulations, and product selection.

Partnering with a Certified Financial Planner (CFP) helps you:

• Tailor asset allocation to your life goals and risk tolerance
• Navigate cross-border tax nuances
• Perform dynamic portfolio rebalancing

Ready to elevate your investment strategy?

Consult a CFP and unlock the full potential of GIFT City funds.