Investment products such as mutual funds, AIFs, and PMS are offered by GIFT City Funds, an International Financial Services Center (IFSC) located in Gujarat International Finance Tec-City (GIFT City), India. These funds, which are governed by the IFSCA (IFSCA) in accordance with international standards, give Indian and non-resident Indian investors access to international markets (such as the US, China, etc.) using foreign currencies (such as USD) with substantial tax advantages (such as reduced dividend and capital gains taxes) and simpler repatriation, circumventing many of the limitations associated with traditional Indian investments.
Gujarat International Finance Tec-City (GIFT City) has quickly become India’s financial hub for global investments. For NRIs, OCIs, and even Indian residents, Gift City funds are creating new opportunities to diversify portfolios, invest in international markets, and enjoy tax benefits — all from a single gateway.
What is GIFT City?
GIFT City (Gujarat International Finance Tec-City), located in Gandhinagar, Gujarat, is India’s first International Financial Services Centre (IFSC). It was conceived in 2008 and has grown into a smart financial hub with:
- Banks and IFSC Banking Units (IBUs)
- Asset Management Companies (AMCs)
- Insurance and reinsurance firms
- Stock exchanges like NSE IFSC & India INX
For investors, GIFT City bridges India and global markets by allowing seamless cross-border investments.
What are GIFT City Funds
Gift City, also called Gujarat International Finance Tec-City, is the first International Financial Services Center (IFSC) in India. Banks, financial institutions, and other multinational corporations call it home, providing them with a favorable setting in which to set up shop and efficiently conduct business. Gift City funds are funds that asset management companies (AMCs) have introduced in Gift City. They have a special set of advantages that help non-resident Indians (NRIs) and Indian citizens living abroad (OCIs) with mutual fund investing in India.
Key features of GIFT City Funds
Regulated by IFSCA
Governed by the International Financial Services Centres Authority.
Global investments
Funds can invest in equities, bonds, ETFs, derivatives, and alternative assets across markets.
Multi-currency access
USD, EUR, GBP, and other major currencies.
Offshore structure
Treated like international funds but managed in India.
Understanding GIFT City Mutual Funds
A GIFT City mutual fund is an investment vehicle offered through the International Financial Services Centre (IFSC) in GIFT City, Gujarat, designed to give investors access to international markets. These funds allow you to invest in global equities, debt instruments, and other international assets while being regulated by the IFSCA. Both Indian residents and NRIs can use these funds as a simpler alternative to making direct overseas investments.
What Makes GIFT City Mutual Funds Distinctive
Access to Global Markets: These funds provide exposure to a diverse range of international securities, including global stocks, bonds, and commodities, all accessible through a single platform.
Streamlined Investment Process: They eliminate the complexity of opening foreign brokerage accounts, managing currency exchanges, and navigating foreign tax requirements that typically come with overseas investing.
Foreign Currency Denomination: Most GIFT City funds are denominated in currencies like USD, which helps you avoid repeated currency conversion costs and protects your returns from exchange rate fluctuations.
Professional Management and Regulation: Investment teams with international expertise manage these funds under IFSCA oversight, offering you a professionally managed investment experience similar to domestic mutual funds.
LRS Framework: Investments fall under the Liberalized Remittance Scheme parameters established by the Reserve Bank of India, permitting outward remittances up to $250,000 per financial year per individual.
Comparing GIFT City Funds with Regular Indian Mutual Funds
| Feature | GIFT City Mutual Fund | Regular Indian Mutual Fund |
|---|---|---|
| Underlying Assets | Global equities, debt, and international securities | Primarily Indian equities, debt, and domestic securities |
| Currency | Foreign currency denominated (typically USD) | Indian Rupee (INR) denominated |
| Investment Process | Streamlined process through IFSCA-regulated platforms | Standard domestic investment procedures |
| Tax Handling | Fund manages foreign tax obligations; investors handle Indian tax compliance | Investors manage Indian tax obligations only |
Types of Investment Options in GIFT City
Investment Avenues via GIFT City – MostlyNRI
| Investment Avenue | Who Can Invest | Key Highlights |
|---|---|---|
| Mutual Funds (Global Funds) | NRIs & Residents | Access to global equities and bonds; repatriation-friendly |
| Alternative Investment Funds (AIFs) | HNIs, Institutions | $150,000+ ticket size; private equity, real estate, hedge funds |
| Portfolio Management Services (PMS) | HNIs, NRIs | Discretionary & advisory portfolio services |
| NSE IFSC Receipts (UDRs) | Residents & NRIs | Fractional ownership of top 50 US stocks |
| GIFT Nifty | NRIs & Traders | Extended trading hours; high liquidity derivatives |
| Offshore Deposits | NRIs | Multi-currency deposits with competitive interest rates |
Features of GIFT City Funds
GIFT City Funds offers investors a unique opportunity to participate in the growth of India’s premier International Financial Services Centre.
Tax Benefits of GIFT City Funds
Benefit from substantial tax exemptions on dividends, interest income, and capital gains—specially tailored for NRIs and OCIs.
Global Reach, Local Advantage
Tap into a strong network of international banks, insurers, and asset managers—while gaining exposure to India’s fast-growing economy.
Global Financial Gateway
GIFT City is emerging as India’s gateway to global finance, similar to the roles played by Singapore and Hong Kong in their regions. Experience seamless trading in a tech-enabled ecosystem featuring global derivatives, cutting-edge fintech innovations, and smart, investor-focused solutions.
Benefits of Investing in GIFT City Funds
- Global Diversification – Access international equities, bonds, ETFs, and alternatives from one platform.
- Multi-Currency Flexibility – Invest in USD, EUR, GBP, etc. without mandatory INR conversion.
- Tax Benefits – No STT, CTT, or GST; concessional tax rates on bonds and dividends.
- Ease of Repatriation – Funds can be moved in and out freely, subject to RBI’s LRS limit ($250,000 per person per year).
- Professional Management – Experienced fund managers handle portfolios with global expertise.
Risks You Should Know
Like any market-linked investment, Gift City funds carry risks:
- High Minimum Investment – AIFs start at $150,000+, limiting access to HNIs.
- Liquidity Risk – Harder to exit quickly vs domestic mutual funds.
- Market Risk – Returns fluctuate with global markets.
- Currency Risk – Exchange rate changes can impact returns.
Tax Benefits of GIFT City Investments
- No STT, CTT, Stamp Duty, or GST on IFSC transactions.
- Concessional TDS on dividends (lower than outside IFSC).
- Tax-free Interest Income from lending to IFSC units.
- Bond Benefits:
- Issued before July 1, 2023 → taxed at 4%
- Issued after July 1, 2023 → taxed at 9%
- NRI-Specific Benefits: Many double-taxation treaties (DTAA) reduce tax burden further.
⚠️ Note: For Indian residents, LTCG (12.5%) and STCG (20%) apply. TCS (20%) is charged for remittances above ₹10 lakh under RBI’s LRS, but it can be adjusted as advance tax.
How Can NRIs and Residents Invest in GIFT City Funds?
You can invest through:
- Direct AMC Websites – e.g., Edelweiss, DSP, Mirae Asset.
- Banks with IFSC Units – ICICI, HDFC, Standard Chartered.
- Registered Brokers – NSE IFSC brokers provide accounts and access.
- Financial Advisors/Wealth Managers – Especially for HNIs investing in AIFs or PMS.
GIFT City Funds vs Domestic Mutual Funds vs Direct Overseas Investment
GIFT City Funds vs Domestic vs Direct Overseas (LRS)
| Feature | GIFT City Funds | Domestic Mutual Funds | Direct Overseas (LRS) |
|---|---|---|---|
| Market Access | Global + Indian | Mostly Indian | Global |
| Taxation | No STT/CTT/GST, concessional tax | TDS, GST, STT apply | Country-specific |
| Minimum Investment | $150k+ (AIFs) | ₹5k–10k | Flexible |
| Currency Options | USD, EUR, GBP | INR only | USD, EUR |
| Ease of Repatriation | High | Restricted | Varies |
What are GIFT City Funds?
GIFT City Fund is a mutual fund that invests in companies and sectors benefiting from the development of Gujarat International Finance Tec-City (GIFT City), focusing on urban growth, finance, and infrastructure.
Who should invest in GIFT City Funds?
Investors looking for exposure to India’s emerging smart city economy and those seeking long-term growth through diversified urban sector investments can consider this fund.
Can I invest in GIFT City Funds through SIP?
Yes, the fund offers flexible investment options, including Systematic Investment Plans (SIPs) and lump-sum investments to suit different investor needs.
What level of risk is associated with GIFT City Funds?
The fund typically involves moderate to high risk as it invests in sectors related to infrastructure and finance, which can be affected by market fluctuations.
Can NRIs invest in Gift City Funds?
Yes. NRIs and OCIs can invest freely under FEMA and SEBI rules, in multiple currencies.
Is GIFT City tax-free?
Not fully. It offers several tax incentives (no STT, no GST, concessional TDS), but LTCG/STCG may still apply depending on residency.
What is the minimum investment?
AIFs require $150,000+, but retail-focused funds like the DSP Global Equity Fund allow smaller tickets.
How does GIFT City differ from regular mutual funds?
Regular MFs focus on India and are taxed normally. GIFT City funds allow global exposure, multiple currencies, and tax savings.
Can foreigners invest?
Yes. Foreign Portfolio Investors (FPIs), NRIs, and institutions can all invest.
How to Invest in DSP Global Equity Fund from GIFT City
Investing in the DSP Global Equity Fund through GIFT City involves completing an application, transferring funds in USD via your bank, and receiving unit allocation after verification. Here’s how the process works.
Getting Started with Your Application: Begin by downloading the DSP IFSC application form from the DSP Mutual Fund website and filling in your personal details. You’ll need to prepare your KYC documents, including the completed application form along with valid ID and address proofs.
Submitting Your Documentation: Send scanned copies of your completed form and supporting documents to [email protected]. Additionally, courier the original documents to DSP’s GIFT City office. The fund house will create a zero-balance folio for you once they process your application.
Transferring Funds Through LRS: After your folio is created, you’ll receive remittance instructions. Approach your bank to initiate a transfer under the Liberalised Remittance Scheme (LRS), which allows you to send up to $250,000 per financial year per PAN. Your bank will handle the rupee-to-dollar conversion and transfer the amount to the fund’s GIFT City account.
Finalizing Your Investment: Once you’ve completed the remittance, email your proof of transfer along with your folio number to [email protected]. DSP Mutual Fund will verify the transaction and allocate units to your account. You’ll receive a confirmation email and Statement of Account when the process is complete.
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