How NRIs Can Invest in GIFT City – A Complete Guide

Gujarat International Finance Tec-City (GIFT City) in Gandhinagar is quickly becoming India's flagship International Financial Services Centre (IFSC). For NRIs (Non-Resident Indians) who are seeking regulated, tax-efficient, and globally diversified investing, Gift City India is a viable option. This guide will walk you through what GIFT City is, why NRIs should be interested, what you can invest in, regulatory & tax issues, and how to invest in GIFT City or register via Gift CFO.

Modern financial district with skyscrapers

What is GIFT City?

GIFT City (Gujarat International Finance Tec-City) is the first greenfield smart city in India with an operating International Financial Services Centre (IFSC). It has a Special Economic Zone (SEZ) portion and a Domestic Tariff Area (DTA). The IFSC portion is for international financial services in India, regulated by the International Financial Services Centres Authority (IFSCA). 

GIFT City is located in Gandhinagar, in Gujarat, and is part of the Ahmedabad metropolitan area. It is one of the most promising developments going on in Gujarat and India and is touted as the next fintech hub of India. 

Why NRIs Should Consider Investing in GIFT City

• Single Access to Global & Indian Markets

The IFSC in GIFT City allows NRIs access to global equities, global sovereign bonds, global derivatives, and India-linked financial instruments under one roof

• Regulatory Simplicity & Flexibility

The regulatory framework in IFSC is designed for International Standards. NRIs/OCIs can invest in global funds set up in GIFT City, India, and SEBI relaxed norms to allow many of these funds to take 100% investment from NRIs.

• Tax Benefits & Currency Benefits

Transactions initiated in IFSC & SEZ have often tax incentives for Companies in GIFT City and investors in GIFT City (e.g., Tax Holidays, lower corporate taxes, exemptions on some transactions).

Many of the investments are share-denominated in foreign currency, thus not requiring repetitive conversions (buy/sell) of currency. Repatriation of funds is generally allowed under IFSC guidelines.

• Investment Opportunities at a Very High-End

NRIs have access to Instrumental Alternative Investment Funds (AIFs), Portfolio Management Services (PMS), and wealth management/global products. These typically have a higher minimum investment level, but with exposure that otherwise will not be available overseas. 

What Investment Avenues Are Available for NRIs in GIFT City

• GIFT City Funds / Mutual Funds / AIFs: Funds regulated by the IFSCA and/or SEBI, some may be global equity/debt or hybrid. 

• Portfolio Management Services (PMS): IFSC-registered discretionary, advisory, or focused PMS. 

• Fixed Deposits / Banking Units: IFSC Banking Units permit foreign currency deposits and sometimes foreign currency savings/FD accounts for NRIs.

• Exchanges & Derivatives: NRI access to derivatives, international securities, “unsponsored depository receipts,” and even foreign listings through the India INX or NSE IFSC.

• Real Assets, REITS, etc.: Some listed REITS, or global real estate via AIFS, may also be available. (Though not always largely available for small investors.)

Regulatory & Eligibility factors:

The International Financial Services Centre Authority (IFSCA) is the regulator of IFSC, GIFT City, and SEBI has taken the appropriate action to ensure that funds established in GIFT City can possibly receive 100% investment from NRIs/OCIs. However, disclosures and compliance is required once AUMs or exposures cross certain thresholds. Minimum investment thresholds: Many GIFT City Funds / AIFs require large minimums (for example, ~US$150,000 in many cases). Not all products are retail-friendly yet.

Tax Implications

Income earned through IFSC-managed funds or banks usually presents itself with concessional tax treatment, but the specific terms will depend on whether an individual or entity is making the investment, and what the underlying assets are (equities, debt, dividends). Some income may also be exempt from TDS (Tax Deducted at Source) depending on certain IFSC / SEZ rules.

NRIs also need to consider the resident country tax laws, specifically double taxation avoidance treaties. Currency risk and withholding tax for dividends/capital gains should also be due diligence items.

How to Invest in GIFT City as an NRI (Step-by-Step)

Below is a simple process for getting started:

1. Know Your Investment Objectives and Risks

Know what you want (global equities, income, diversification, capital growth, etc.) Also, choose your ticket size (since many IFSC funds have high minimums).

2. Define Regulatory and Legal Eligibility

Confirm you are an NRI/OCI as per Indian law, confirm with GiftCFO or your financial/advisory partner what documents need to be included (PAN, passport, proof of NRI status).

3. Choose your Investment Vehicle

Fund / AIF / PMS / Banking product or exchange-based instrument. Compare fees, liquidity, and transparency.

4. Open Accounts as Required

Open foreign currency bank accounts as required (FCNR, or through IBUs). Open investment/brokerage/fund accounts through IFSC-registered entities.

5. Perform KYC, documentation, disclosures

Send/take all the identity proofs, address, NRI status, and possibly any disclosures required by SEBI / IFSCA. If investing large funds, they may need to do a higher level of due diligence.

6. Transfer Money

Move your capital. If investing in foreign currency products, ensure you are not breaching any regulations and foreign exchange documentation, etc.

7. Monitor and Repatriate

Monitor the performance, as you will have to keep your filings up to date. IFSCA allows for the repatriation of your money based on its rules. You will also need to keep in mind any tax filings in your residential country.

How to Register / Set Up via GIFT City (If Doing Business or Funds)

If you do not want to just invest, but would like to create an entity, fund, business, or register with GIFT City with an IFSC entity or with the help of the Gift CFO, here are the steps: Determine business discipline (banking, fund management, insurance, etc) and framework: Company, LLP, or Trust.

• Submission of an application for a provisional letter of allotment (PLOA) of office space in GIFT SEZ, as this grants your entity physical presence in the GIFT SEZ.

• Apply for registration/license with IFSCA in accordance with the appropriate regulation. This process requires meeting capital infusion minimums, name approvals, and having incorporation documents.

Complete all post-setup compliance obligations: audit, annual returns, and regulatory filings.

Risks & Things to Watch Out For

• High Minimum Investment: A lot of products are designed for those with considerable wealth; thus, barriers to entry (e.g., ~US$150,000) may be too high. 

• Currency Risk: If you invest through foreign currency instruments, your returns are affected by fluctuations in the exchange rate. 

• Regulatory/Legal Changes: GIFT IFSC is new, hence the rules are evolving; therefore, eligibility, tax rules, and disclosure requirements may change. 

• Liquidity Constraints: Certain funds / AIFs / investments may have lock-in periods or less frequent redemption windows than mutual funds. 

• Tax & Cross Border Complexity: Depending on where you are, you may be subject to tax in both locations; international treaties and reporting obligations are important.

Conclusion

GIFT City India provides a very appealing opportunity for NRIs: access to global markets, positive regulatory & tax regimes, and a developing universe of financial products, all under a well-established, regulated Indian jurisdiction. Although minimums are high and it is a developing landscape, those who act early will be able to enjoy the greatest benefit. Partnering with Gift CFO will smooth the process of registration and compliance in GIFT City and investment planning to facilitate better, successful, and compliant investing in companies in GIFT City.