Gift City Funds – Everything You Need to Know
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:
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Banks and IFSC Banking Units (IBUs)
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Asset Management Companies (AMCs)
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Insurance and reinsurance firms
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Stock exchanges like NSE IFSC & India INX
For investors, GIFT City bridges India and global markets by allowing seamless cross-border investments.
Image Credit: InCorp Advisory
What are GIFT City Funds
Gift City Funds are mutual funds and investment products launched by AMCs operating in GIFT City’s IFSC. Key features include:
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.
Types of Investment Options in GIFT City
| 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
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:
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High Minimum Investment – AIFs start at $150,000+, limiting access to HNIs.
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Liquidity Risk – Harder to exit quickly vs domestic mutual funds.
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Market Risk – Returns fluctuate with global markets.
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Currency Risk – Exchange rate changes can impact returns.
Tax Benefits of GIFT City Investments
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No STT, CTT, Stamp Duty, or GST on IFSC transactions.
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Concessional TDS on dividends (lower than outside IFSC).
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Tax-free Interest Income from lending to IFSC units.
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Bond Benefits:
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Issued before July 1, 2023 → taxed at 4%
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Issued after July 1, 2023 → taxed at 9%
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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:
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Direct AMC Websites – e.g., Edelweiss, DSP, Mirae Asset.
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Banks with IFSC Units – ICICI, HDFC, Standard Chartered.
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Registered Brokers – NSE IFSC brokers provide accounts and access.
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Financial Advisors/Wealth Managers – Especially for HNIs investing in AIFs or PMS.
GIFT City Funds vs Domestic Mutual Funds vs Direct Overseas Investment
| 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 |
FAQs about GIFT City Funds
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1. What is 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.
2. 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.
3. What are the tax benefits of investing in GIFT City Funds?
Due to GIFT City’s status as an International Financial Services Centre (IFSC), certain investments in this fund may qualify for tax advantages under applicable laws.
4. 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.
5. 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.
6. Can NRIs invest in Gift City Funds?
Yes. NRIs and OCIs can invest freely under FEMA and SEBI rules, in multiple currencies.
7. 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.
8. What is the minimum investment?
AIFs require $150,000+, but retail-focused funds like the DSP Global Equity Fund allow smaller tickets.
9. 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.
10. Can foreigners invest?
Yes. Foreign Portfolio Investors (FPIs), NRIs, and institutions can all invest.