How NRIs and Foreign Investors Can Benefit from Investing in GIFT City

Introduction

For Indians to invest in global markets, several options like US stocks (Global Access Platform), Global mutual funds, international ETFs, etc., are available. 

Everything is possible with “GIFT City – is one-stop destination for all.”

But, what if “NRIs want to invest in India? Does GIFT City allow foreign investors or NRIs to invest?

Stay with us as we explore how NRIs can make a GIFT City investment, how it’s different from traditional routes, what benefits are stored, whether investments can be made in USD, taxation, etc. 

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What is GIFT City?

GIFT City stands for Gujarat International Finance Tec-City. It is India’s first International Financial Services Centre (IFSC), located in Gujarat.

In simple language, it is like a financial zone inside India that operates with international standards.

Instead of Indian investors going to Singapore, Dubai, or London for global financial services, India wanted to create a similar ecosystem within itself.

Soon, in 2008, PM Modi announced the vision of “Nano City”, which was later fulfilled in 2015 with the inauguration of GIFT City in Gandhinagar, Gujarat. 

Today, GIFT City IFSC allows:

• Global investing
• Foreign currency transactions
• Access to Capital Markets
• International banking
• Alternative investment funds (AIFs)
• Bullion Exchange
• Global stock investing
• Offshore-style financial products, etc.

How It Is Different From Traditional Investing Routes?

The major difference lies in the Currency, Structure, & Tax Benefits.

Normally, if NRIs invest in India:

• They use NRE/NRO accounts
• Investments are mostly INR-based
• FEMA regulations apply differently
• Currency conversion becomes part of investing.

But in GIFT City:

• Investments can happen in foreign currency, like USD
• Products are designed for global investors
• Regulations are IFSC-focused
• Tax structure can be more efficient in some cases

That’s why many investors now prefer to invest in GIFT City in USD instead of routing everything through traditional domestic channels.

Another thing that GIFT City provides is “Accessibility.” Investors get exposure to Indian markets, Global products, International funds, AIFs, PMS, and other products.

Who Can Invest in GIFT City?

With the structure of GIFT City, almost all types of individuals can invest here, Resident Indians and Foreign Investors. 

Here’s a list of eligible investors who can invest in GIFT City:

• NRIs
• Foreign nationals
• Foreign portfolio investors (FPIs)
• Overseas citizens of India (OCIs)
• Institutional investors
• Family offices
• Global funds

Even Indian residents can access certain products in GIFT City under the Liberalised Remittance Scheme (LRS), depending on regulations.

Why Are NRIs & Foreign Investors Interested in GIFT City?

The main reason NRIs and foreign investors prefer GIFT City is Flexibility and Taxation.

Foreign investors in GIFT City, especially, are looking at it because it combines:

• International investing environment
• India's growth story
• USD investing options
• Potential tax benefits
• Easier cross-border movement of capital

For NRIs specifically, GIFT City becomes interesting because they can keep investments closer to global standards while still participating in Indian opportunities.

Another major reason is Diversification.

Suppose an NRI living in Dubai, the US, or Singapore wants exposure to Indian equities or alternative assets. GIFT City gives them an offshore-like route without making the process feel too domestic.

More often, investors also look at GIFT City tax benefits for NRIs before choosing this route.

Where Can NRIs & Foreign Investors Invest Through GIFT City?

Through GIFT City IFSC, investors can access multiple investment products, such as:

1. Alternative Investment Funds (AIFs)

These are professionally managed funds, allowing investors to invest in unlisted securities and trading strategies via Cat 1, Cat 2, and Cat 3 AIFs. 

Here, the minimum investment to invest in AIF (via GIFT City) is $1,50,000.

2. Global Equity Investing

Some platforms, like Global Access Platform, allow access to US stocks and global securities from the GIFT City ecosystem. 

3. Global Mutual Funds

Unlike domestic MFs, NRIs and overseas investors can also explore global mutual fund opportunities through IFSC-registered platforms.

4. USD-Denominated Insurance

One unique feature inside the IFSC ecosystem is USD-denominated insurance products. It includes both ULIP (Insurance + Investment plans) and retail insurance products. 

Anyone, including Resident Indians, NRIs, and foreign investors, can access them.

5. GIFT NIFTY 

GIFT NIFTY, earlier known as SGX NIFTY, is also one of the biggest attractions inside GIFT City.

It allows international investors to gain exposure to Indian equity markets through the IFSC exchange ecosystem. As a result, GIFT NIFTY has become an important gateway for global participation in Indian markets.

6. Portfolio Management Services (PMS)

PMS or Portfolio Management Services help investors access professionally managed portfolios based on:

• Risk appetite
• Investment goals
• Global asset allocation strategies

Can Investments in GIFT City Be Made in USD?

The biggest advantage for NRIs is that investments can be made in USD. 

In case any GIFT City investments by NRIs are in foreign currencies (other than USD) like EUR, GBP, or others via LRS (Liberalized Remittance Scheme). 

Thus, for many investors, investing in USD feels operationally easier, unlike other routes.

How NRIs Can Invest in GIFT City: Step-by-Step Process

The process is not as complicated as people think.

Step 1: Choose an IFSC Registered Entity

Depending on your investment requirement, choose a provider;

• IFSC-registered broker
• Bank
• Wealth platform
• Fund house, etc.

But, always verify whether they are registered within GIFT City IFSC framework.

Step 2: Complete KYC

Provide basic KYC and compliance documents to complete the onboarding process.

Step 3: Open Required Account

Depending on investment type, investors may need:

• IFSC banking account
• Trading account
• Investment account

Step 4: Fund the Account

Funds are generally remitted in foreign currency (USD) for further investment. 

Step 5: Start Investing

After verification, investors can access eligible products available within GIFT City.

The process can vary slightly depending on whether the investment is into. For example, AIF, global equities, insurance, PMS, etc. 

Taxation for NRIs & Foreign Investors in GIFT City

One of the important reasons why GIFT City investment for NRIs is gaining attention is because of its tax-efficient structure.

Here are some key tax benefits available in GIFT City:

• Lower Tax on Dividend Income 

   Dividend income through certain IFSC investments is taxed at a concessional rate of 10%.

• Reduced Capital Gains Tax 

  Capital gains on certain IFSC-listed shares and derivatives may attract tax as low as 9%.

• No TDS on Certain Income 

  In GIFT City, any income earned by NRIs and OCIs does not attract Tax Deducted at Source (TDS).

• DTAA Benefits 

  Since many investments in GIFT City are carried out in foreign currency, investors may also be able to claim benefits under India’s Double Taxation Avoidance Agreements (DTAAs). 

Do check with your respective country's tax rules regarding such benefits.

• No GST on Transactions 

  Transactions executed within GIFT City are exempt from Goods and Services Tax (GST), giving you more post-tax returns.

Conclusion

GIFT City is slowly becoming India’s bridge to global finance. For NRIs and foreign investors, it offers something different from traditional investment routes.

But at the same time, investors should still understand the product properly before investing. 

Because not every GIFT City product is automatically low-risk or tax-free.