GIFT City continues its remarkable growth trajectory, now hosting over 400 registered entities with $22 billion in investment commitments. India's first International Financial Services Centre has firmly established itself as a serious alternative to Singapore and Dubai for Non-Resident Indians.
If you're an NRI, you've faced the usual challenges when investing in India. Complex FEMA regulations, high tax burdens, repatriation complications, and mutual fund restrictions have pushed many NRIs to route investments through offshore hubs.
GIFT City changes this. Located in Gujarat between Ahmedabad and Gandhinagar, this financial hub offers tax-efficient access to both Indian and global markets. You can invest in foreign currencies, enjoy zero capital gains tax on derivatives, and repatriate funds freely.
With the tax holiday extended until 2030 and a significant new benefit from April 2026 allowing mutual funds and ETFs to relocate without capital gains tax, GIFT City has become more attractive than ever for NRI investors.
Key Takeaway
GIFT City is India's first International Financial Services Centre offering NRIs tax-efficient access to both Indian and global markets with simplified regulations.
Here's what you'll learn:
- What GIFT City is and why it's continuing to gain momentum as an alternative to Singapore and Dubai
- Seven investment options available including funds, AIFs, real estate, and global equities
- Complete step-by-step process to open account and start investing with latest updates
- Risks and challenges to consider before investing, including high minimums and policy changes
Understanding GIFT City and Its Significance for NRIs
What Is GIFT City (IFSC)?
GIFT City stands for Gujarat International Finance Tec-City. It's India's first operational smart city and International Financial Services Centre, established as a Special Economic Zone in 2015. The International Financial Services Centres Authority (IFSCA) regulates GIFT City with global standards.
Under the Foreign Exchange Management Act, GIFT City is treated as foreign territory for financial purposes. This means you can conduct transactions in multiple foreign currencies without mandatory rupee conversion. The ecosystem includes major banks like ICICI, HDFC, SBI, and global names like JP Morgan and Barclays.
How GIFT City Differs from Traditional Indian Investments
Traditional NRI investment options in India require currency conversion to rupees, charge Securities Transaction Tax on equity trades, and involve complex repatriation. GIFT City eliminates these hassles. Your investments remain in foreign currencies like USD, EUR, or GBP, avoiding conversion costs.
There's no STT, no Commodity Transaction Tax, and no stamp duty on IFSC transactions. While traditional investments require Portfolio Investment Scheme permission for secondary markets, GIFT City investments don't need this approval. You can trade global equities like Apple, Amazon, and Tesla directly through NSE IFSC exchanges.
Why NRIs Are Choosing GIFT City
The tax holiday extended through Budget 2025 runs until March 2030, providing long-term policy certainty. SEBI's June 2024 decision allowing 100% NRI ownership of funds domiciled at GIFT IFSC removed the previous 50% limit, and this continues to drive increased NRI participation.
Investment barriers have decreased significantly. Alternative Investment Funds dropped from $150,000 to $75,000 in February 2025. Some GIFT City mutual funds now accept $500 minimum, making it accessible beyond high-net-worth individuals.
A major development from April 2026 allows mutual funds and ETFs to relocate to GIFT City without incurring capital gains tax. This tax-neutral relocation encourages more offshore funds to shift their base from Singapore or Mauritius, expanding investment options for NRIs.
Employment in GIFT City is projected to grow from 25,000 to 150,000 over the next few years, creating strong demand for financial products and real estate. For UAE-based NRIs in tax-free jurisdictions, GIFT City maintains that tax efficiency when investing in Indian growth.
Investment Options Available in GIFT City
GIFT City Mutual Funds and Feeder Funds
Asset management companies offer mutual funds denominated in foreign currencies. Feeder funds invest in corresponding mainland India schemes, giving you Indian equity exposure with IFSC tax benefits.
Tata Asset Management launched their Dynamic Equity Fund at GIFT City in September 2025 with just $500 minimum. A significant development from April 2026 allows mutual funds and ETFs to relocate to GIFT City from offshore jurisdictions without incurring capital gains tax, making portfolio restructuring more attractive for existing investors.
These funds are IFSCA-regulated with professional management, avoiding restrictions that US and Canada-based NRIs face with regular Indian mutual funds. The growing ecosystem means more AMCs are launching GIFT City-specific offerings.
Alternative Investment Funds (AIFs)
AIFs pool capital for investing in various asset classes. Category I AIFs focus on startups and infrastructure. Category II AIFs include private equity. Category III AIFs employ hedge fund strategies.
Minimum investment dropped from $150,000 to $75,000 in February 2025, with typical three-year lock-ins. You get exposure to equities, debt, private equity, real estate, and venture capital. For UAE-based NRIs, Category III AIFs offer tax-free gains on specified securities.
Offshore Banking and Foreign Currency Deposits
IFSC Banking Units offer Global Savings Accounts in USD, GBP, EUR, CAD, AED, AUD, SGD, and HKD with 2.5-5% annual interest rates. Fixed deposits are available from seven days to 39 months, offering more flexibility than traditional FCNR deposits requiring one-year minimum.
Interest earned is completely tax-free in India. Banks like ICICI, HDFC, Axis, and SBI provide loans against deposits, remittance facilities, and demat accounts for securities trading.
Global Equities and Trading Options
Through NSE IFSC and India INX, you can trade global equities and bonds directly without Securities Transaction Tax. Trading extends 21 hours across Asian, European, and US market timings.
You can invest in ETFs linked to global indices and access unsponsored depository receipts. The advantage is managing both Indian and international investments under one IFSC framework.
REITs and Real Estate
REITs listed on GIFT City exchanges provide Indian real estate exposure without direct property ownership. You get fractional ownership in commercial properties with exchange-traded liquidity.
Physical real estate in GIFT City offers commercial offices and residential apartments with world-class infrastructure. Property prices range ₹9,000-10,500 per square foot, continuing to appreciate as GIFT City's financial ecosystem expands. Ensure RERA approval and verify developer credentials before investing, following FEMA rules for NRIs.
Tax Benefits That Make GIFT City Attractive
Income Tax Exemptions
Businesses in GIFT IFSC enjoy 100% income tax exemption for any 10 consecutive years within 15 years. For investors, non-residents in Category III AIFs or retail schemes are exempt from tax on income from specified securities.
Budget 2025 extended the deadline to March 2030 for businesses to commence operations and qualify for benefits, providing five-year policy certainty.
Zero Transaction Taxes
Complete exemption from Securities Transaction Tax, Commodity Transaction Tax, and stamp duty. If you trade ₹10 lakh equity in Mumbai, you pay ₹1,000 STT. In GIFT City, it's zero. These savings compound significantly over time.
Dividend and Interest Income Advantages
Dividend income from IFSC units is taxed at just 10% compared to 20% for non-IFSC companies. Interest income from foreign currency deposits is completely tax-free in India. For UAE-based NRIs, this means zero taxation entirely.
Rupee-denominated bonds on IFSC exchanges carry 4-9% tax rates, significantly lower than regular bond taxation. Income from derivatives is tax-free under Section 10(4E), including non-deliverable forwards and OTC derivatives with FPIs.
Budget 2025 Updates and April 2026 Benefits
The Finance Minister announced extended tax exemption on participatory notes to include FPIs based in GIFT City. A transformative change from April 2026 allows mutual funds and ETFs to relocate to GIFT City from offshore locations like Mauritius or Singapore as a tax-neutral transaction. This eliminates capital gains tax on relocation, encouraging more global funds to shift their base to GIFT City and expanding investment choices for NRIs.
Life insurance proceeds from IFSC offices became tax-exempt from April 2025. Ship leasing businesses received capital gains tax exemption, positioning GIFT City for maritime finance. These measures collectively strengthen GIFT City's competitive position against Singapore and Dubai.
How NRIs Can Invest in GIFT City (Step-by-Step Process)
Step 1: Verify Eligibility and Choose Investment Type
Confirm your NRI, OCI, or PIO status. Resident Indians can invest only $250,000 annually under Liberalized Remittance Scheme.
Decide your investment avenue based on goals. Mutual funds start at $500 for low minimums. AIFs require $75,000 for alternative assets. Foreign currency deposits offer fixed income. REITs provide real estate exposure.
Step 2: Complete KYC and Documentation
IFSCA implemented video KYC for NRIs following their July 2025 consultation, allowing remote completion without visiting India. Submit your passport, PAN card (for certain transactions), overseas address proof, and visa/work permit.
Video KYC uses AI-based face matching and liveness detection through encrypted sessions. The process takes 15-30 minutes with a representative verifying documents and capturing live photos.
Step 3: Open Foreign Currency Account
Select an IFSC Banking Unit (ICICI, HDFC, Axis, or SBI). Open a Global Savings Account in your preferred currency. Account opening takes 3-7 business days with complete documentation.
Most banks require minimal or no minimum balance. Fixed deposits need $1,000-10,000 depending on tenure and bank.
Step 4: Fund Your Account and Select Investments
Transfer funds from overseas via SWIFT (2-3 business days) or from your NRE or NRO accounts with currency conversion.
Once funded, invest directly with fund houses for mutual funds, approach fund managers for AIFs, or open demat accounts for equity trading. Set up systematic investment plans similar to regular Indian funds.
Step 5: Understand Repatriation and Tax Reporting
GIFT City offers full repatriation of capital and income in foreign currencies without RBI approval. Maintain investment confirmations and bank statements for tax filing in your residence country.
For NRI repatriation of funds, proper documentation is essential. Understanding DTAA benefits helps determine which country has taxing rights.
Required Documents and Minimum Investment Requirements
Essential Documents
Your checklist includes valid passport (six months minimum validity), PAN card, overseas address proof (utility bill or bank statement under three months old), and residence visa proving NRI status.
For video KYC, you need stable internet, a camera-enabled device, good lighting, and physical documents ready for display. The representative will verify documents and perform liveness checks.
Minimum Investment Table
| Investment Product | Minimum Investment | Lock-in Period | Best For |
|---|---|---|---|
| GIFT City Mutual Funds | $500 to $10,000 | None | Retail investors |
| Alternative Investment Funds | $75,000 | 3 years typical | HNIs |
| Foreign Currency Deposits | $1,000 to $10,000 | 7 days to 5 years | Conservative investors |
| Global Equities Trading | No minimum | None | Active traders |
| REITs | Market price of units | None | Real estate exposure |
| Physical Real Estate | ₹50 lakh+ | Long term | Long term investors |
The AIF minimum reduction from $150,000 to $75,000 in February 2025 significantly expanded accessibility. Mutual funds at $500 represent a breakthrough for mid-income NRIs.
2025 Regulatory Updates and Changes
Budget 2025 Announcements
The sunset clause extension to March 2030 gives businesses five years to establish operations and claim tax benefits. Mutual funds and ETFs can relocate under tax-neutral regime, encouraging shifts from Singapore or Mauritius.
Ship leasing received capital gains tax exemptions, positioning GIFT City for maritime finance. These measures strengthen GIFT City's competitive position globally.
SEBI's 100% NRI Ownership Rule
SEBI's June 2024 change allows NRIs and OCIs to contribute 100% of corpus in funds seeking FPI registration, up from the previous 50% limit. This means NRI families can completely own and control global funds based in GIFT City.
These funds can invest in Indian capital markets, providing a regulated avenue for NRIs to pool family wealth through professionally managed structures. Family offices particularly benefit from this flexibility.
Enhanced Access and Reduced Barriers
IFSCA reduced minimum corpus requirements from $5 million to $3 million for AIFs. Open-ended funds can commence with $1 million and scale to $3 million within 12 months.
Individual investor minimums dropped to $75,000, with PMS minimums proposed at the same level. Key Managerial Personnel requirements were relaxed, making fund manager operations easier.
Understanding Tax Implications in Your Home Country
USA-based NRIs
US-based NRIs face PFIC (Passive Foreign Investment Company) rules with most GIFT City mutual funds. You'll need Form 8621 filings and face taxation on notional unrealized gains, making these investments tax-inefficient despite Indian tax benefits.
FBAR reporting applies if aggregate foreign accounts exceed $10,000. Consult a US-India tax advisor before investing. Some US-based NRIs prefer direct equity or US-based India ETFs despite lower tax efficiency.
UAE and GCC-based NRIs
UAE, Bahrain, Oman, Qatar, and Kuwait offer tax-free environments. GIFT City aligns perfectly since India doesn't tax GIFT City income and your residence country has zero tax. You keep 100% of returns.
Currency matching benefits UAE-based NRIs earning in AED or USD. Repatriation is seamless with no approvals needed, making GIFT City far more attractive than traditional Indian investments.
Singapore and Other Tax Residents
Singapore taxes foreign-sourced income only if remitted. GIFT City income kept outside Singapore remains untaxed. Capital gains are generally not taxed, but dividend and interest income may be taxed depending on circumstances.
Malaysia doesn't tax foreign-sourced income for tax residents. Thailand may tax foreign income depending on remittance timing. Research your specific country's rules or consult local tax experts.
DTAA Benefits
India has Double Taxation Avoidance Agreements with 90+ countries. For GIFT City investments, India typically doesn't exercise taxing rights due to IFSC exemptions, so your residence country's rules apply.
To claim DTAA benefits, provide Tax Residency Certificate from your residence country. This proves you're eligible for treaty benefits and prevents double taxation.
Risks and Challenges to Consider
High Minimum Investment Barriers
Despite reductions, the $75,000 AIF minimum equals approximately ₹65 lakh, exceeding many NRIs' annual savings. Diversification across multiple AIFs requires $225,000-300,000.
Compare this to US-based investing with $10 fractional shares or Singapore robo-advisors with $1,000 minimums. GIFT City, despite progress, remains relatively high-threshold.
Policy and Regulatory Uncertainty
GIFT City is barely a decade old with evolving regulations. In 2024, regulators prohibited certain US-based ETF investments, disrupting planning. Tax benefits depend on government policy, and while extended to 2030, there's no guarantee beyond that.
Investment concentration limits changed with IFSCA regulations, introducing 33.33% limits in single investee companies. Such regulatory tweaks create complexity for existing investors adjusting strategies.
Currency Fluctuation Risks
GIFT City investments in USD benefit dollar-earning NRIs but create currency risk for others. UAE-based NRIs face minimal risk with AED-USD peg. Australia-based NRIs earning in AUD face AUD-USD fluctuation risk.
Rupee depreciation protection works both ways. If you're returning to India as a resident and dollar weakens significantly, your rupee returns diminish. Hedging currency risk adds costs.
Liquidity and Market Volatility
AIFs have typical three-year lock-ins, restricting capital access. GIFT City mutual funds might have lower daily liquidity than mature markets, with exit loads for early withdrawal.
Real estate is inherently illiquid, taking months to sell. Global equities and derivatives carry high volatility. The US market experienced 20% corrections in 2022. Only invest capital you can afford to lose in high-risk products.
Balance your portfolio between liquid (mutual funds, trading) and illiquid (AIFs, real estate) investments based on your needs and emergency fund requirements.
Conclusion
GIFT City represents a significant opportunity for NRIs seeking tax-efficient access to Indian and global markets. With over 400 registered entities, $22 billion in commitments, and continuous infrastructure development, it's maturing into a credible alternative to Singapore and Dubai. The tax benefits are compelling with zero capital gains on derivatives, 10% dividend rates, no transaction taxes, and full repatriation freedom. The April 2026 benefit allowing tax-neutral mutual fund and ETF relocation, combined with the extended tax holiday until 2030, makes it more accessible than ever.
Approach with realistic expectations. High minimums, evolving regulations, currency risks, and market volatility require careful consideration. GIFT City works best as part of a diversified portfolio. Assess whether it aligns with your goals, risk tolerance, and tax situation. Consider starting small through mutual funds or deposits before committing larger capital.
Frequently Asked Questions
Can US-based NRIs invest in GIFT City funds without PFIC complications?
Unfortunately, most GIFT City mutual funds are likely classified as PFICs under US tax law, creating complications like regular Indian mutual funds. You'll need annual Form 8621 filings and face taxation on notional unrealized gains. Some AIFs structured as partnerships might avoid PFIC classification. Many US-based NRIs find GIFT City administratively burdensome due to PFIC rules. Consider consulting a US tax advisor specializing in international taxation. Some stick to direct equity or US-based India ETFs despite lower tax efficiency.
How long does it take to open a GIFT City investment account?
The timeline is 5-10 business days for most IFSC bank accounts. With 2025's video KYC process, some banks complete opening in 3-5 days without physical document shipping. Once your bank account is active, overseas fund transfers take 2-3 business days via SWIFT. Mutual fund investments add 2-3 business days for processing. Alternative Investment Fund subscriptions take 1-2 weeks for regulatory verifications. Plan for about two weeks from starting to first investment confirmation. Learn about repatriation processes for fund movement timelines.
Can I repatriate my GIFT City investment returns freely to any country?
Yes, GIFT City offers full repatriation freedom. Since transactions occur in foreign currencies and IFSC is treated as foreign territory under FEMA, you can transfer capital and returns to any country without RBI approval. Maintain proper documentation including investment confirmations, bank statements, and sale proceeds records. For investments from NRE or NRO accounts, repatriation rules differ. NRE funds are fully repatriable while NRO has $1 million annual limits. Direct investments from overseas into GIFT City have no such restrictions, subject only to your residence country's regulations.
What happens to my GIFT City investments if I return to India as a resident?
Your existing GIFT City investments continue after becoming a resident Indian. However, tax treatment changes significantly. As a non-resident, you enjoyed tax exemptions on GIFT City income. Once resident, your global income including GIFT City returns becomes taxable in India under normal slabs. Your securities, accounts, and holdings continue without needing to be sold. Inform your IFSC bank about changed residency status for KYC and tax reporting. Consider booking profits while still NRI to maximize tax-free gains. Plan your return to India holistically including GIFT City portfolio implications.
About the Author
By Prakash
CEO & Founder of InvestMates
Prakash is the CEO & Founder of InvestMates, a digital wealth management platform built for the global Indian community. With leadership experience at Microsoft, HCL, and Accenture across multiple countries, he witnessed firsthand challenges of managing cross-border wealth. Drawing from his expertise in engineering, product management, and business leadership, Prakash founded InvestMates to democratize financial planning and make professional wealth management accessible, affordable, and transparent for every global Indian.
