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Read ArticleInvesting globally through GIFT City: a practical primer
GIFT City lets resident Indians and NRIs access global funds from within India. How it works, who it suits, and the questions to ask before you invest.
For years, Indians who wanted global investments had two broad choices: domestic funds that invest abroad, or sending money overseas to invest directly. GIFT City, India’s International Financial Services Centre (IFSC) in Gandhinagar, adds a third route. Funds set up there invest globally, are regulated by the International Financial Services Centres Authority (IFSCA), and are usually denominated in US dollars.
Who can invest
- Resident Indians invest through the Liberalised Remittance Scheme (LRS), which allows remittances of up to USD 250,000 per person per financial year for permitted purposes, including investment in IFSC funds.
- NRIs and OCIs can invest from their foreign earnings, which makes GIFT City a convenient way to hold dollar assets with an Indian manager.
Why investors look at it
- Global diversification across markets and currencies, from a regulated Indian jurisdiction.
- Dollar-denominated holdings, which can suit goals such as education abroad.
- For NRIs, a structure that many find simpler to manage than opening accounts in several countries.
What to weigh up
GIFT City is a route, not a product. The fund you choose still matters most, and the usual questions apply: what the fund invests in, what it costs, how liquid it is, and how it fits with the rest of your portfolio.
- Minimum investment: many IFSC funds have higher minimums than domestic mutual funds.
- Currency: returns in rupees depend on the dollar-rupee rate, which can help or hurt.
- Tax: tax treatment differs by structure and by investor type, and has changed in recent budgets. Resident Indians must also report foreign assets in their returns.
- TCS on remittances: resident Indians may face tax collected at source on LRS remittances above ₹10 lakh a year. It is not an extra tax: it can be adjusted against your income tax liability, but it does tie up cash until then.
A sensible way to begin
- Decide what share of your portfolio should be international, and why.
- Compare the GIFT City route with domestic international funds and with investing directly abroad, on cost, tax and convenience.
- Check the fund’s documents: strategy, fees, redemption terms and the manager’s track record of process, not just returns.
- Start with a measured allocation and review it alongside your Indian investments.
For many families, the best answer combines routes. The aim is a global allocation that is deliberate, tax-aware and easy to keep track of.
