Category: GIFT City

Your salary, business, home, provident fund and most of your equity investments are typically linked to one currency and one economy.

GIFT City funds offer a regulated route to allocate part of your wealth to US dollars and global companies.

Since 25 August 2026, the minimum first investment in some outbound GIFT City funds has fallen from USD 5,000 to USD 500, roughly from ₹4.7 lakh to about ₹48,000.

This makes global diversification easier to start, but suitability still depends on your goals, tax residency, existing exposure and investment horizon.

What Is a GIFT City Fund?

GIFT City in Gandhinagar houses India’s International Financial Services Centre (IFSC).

Funds domiciled there are regulated by IFSCA rather than SEBI and can be denominated in US dollars, publish a dollar NAV and provide access to international markets.

The key distinction is between outbound and inbound funds.

Type	Money Invested In	Suitable For
Outbound	US and global markets	Residents seeking global diversification
Inbound	Indian equities and bonds	NRIs and foreign investors seeking India exposure

If your objective is dollar diversification, an outbound fund is the relevant category.

Why GIFT City Matters for Global Investing

SEBI limits how much India’s domestic mutual fund industry can collectively invest overseas. That limit has already been reached, restricting fresh investments and SIP registrations in several international mutual fund schemes.

GIFT City outbound funds sit outside this domestic mutual fund limit.

Resident Indians can invest through the RBI’s Liberalised Remittance Scheme (LRS), which was widened in July 2024 to cover permissible financial products in an IFSC.

In simple terms, GIFT City has become an additional regulated route for Indian investors seeking global exposure.

Minimum Investment Falls From $5,000 to $500

Effective 25 August 2026, PPFAS GIFT reduced the minimum investment on both its outbound schemes.

Particular	Earlier	From 25 Aug 2026
Minimum first subscription	$5,000	$500
Minimum additional subscription	$5,000	$500
Residual balance threshold	$1,000	$100

This is a 90% reduction in the entry ticket.

It does not change expected returns. What it changes is accessibility: investors can start with roughly ₹48,000 rather than committing close to ₹5 lakh upfront.

How a $500 Investment Plan Works

Each investment requires converting rupees into dollars at the prevailing exchange rate and buying units at the applicable NAV.

This means periodic investing averages both:

• the fund’s NAV; and
• the USD/INR exchange rate.

In the illustrative 12-month example from the source note:

• Total invested: ₹5,85,800
• Average USD/INR: 97.63
• Average acquisition cost: $11.72
• Units accumulated: 512.12

Averaging does not guarantee higher returns. If markets rise continuously, a lump-sum investment can perform better.

Its primary benefit is reducing dependence on one entry point and making the allocation easier to implement gradually.

Monthly vs Quarterly: Watch the Remittance Cost

A GIFT City investment is not the same as a domestic mutual fund SIP.

Each instalment may involve:

• Form A2;
• LRS declaration;
• SWIFT transfer;
• bank processing charges;
• GST; and
• forex conversion costs.

Assuming approximately ₹1,200 per remittance, the fixed cost on ₹5.86 lakh invested over a year would be:

Frequency	Transfers	Approx. Fixed Charges	Cost
Monthly	12	₹14,400	2.46%
Quarterly	4	₹4,800	0.82%
Half-yearly	2	₹2,400	0.41%

For many families, quarterly remittances may offer a better balance between averaging and transaction costs.

Forex spreads are additional and may be negotiable, particularly for larger transactions.

How Much of Your Portfolio Should Be in Dollars?

The source framework treats dollar exposure as a satellite allocation rather than a core allocation.

Around 5%: For general currency hedging and global diversification.

Around 7%–10%: Where there is a defined dollar goal, such as overseas education, relocation or family commitments abroad.

Above 10%: Generally only where there is a substantial and clearly defined foreign-currency liability.

For example:

Portfolio	5% Allocation	10% Allocation
₹2.5 crore	₹12.5 lakh	₹25 lakh
₹5 crore	₹25 lakh	₹50 lakh

Under LRS, resident individuals can remit up to USD 250,000 per financial year, across all permitted LRS uses.

How the Dollar Hedge Works

When the rupee weakens against the dollar, the rupee value of a dollar-denominated asset rises even if the underlying investment is unchanged.

That is the currency hedge.

But it works both ways.

If the rupee strengthens, returns from dollar assets can be reduced when translated back into rupees.

Currency risk is therefore part of the hedge itself.

GIFT City Funds and US Estate Tax

Directly held US shares or US-listed ETFs may qualify as US-situs assets for a non-US investor.

For non-resident aliens, US estate tax rates can rise to 40%, while the exemption can be limited to USD 60,000. India does not have a US estate-tax treaty.

A GIFT City fund changes the ownership structure.

You own units of the IFSC scheme, while the scheme owns the underlying global securities.

This can help avoid the US estate-tax exposure associated with directly owning US-situs securities.

Resident Indians vs NRIs

Factor	Resident Indian	NRI / OCI
Investment route	LRS from Indian bank	Overseas/NRE funds
LRS limit	$250,000 per FY	Not applicable
TCS	Applicable under prevailing LRS rules	Not applicable under LRS
Funds	Outbound schemes	Inbound or outbound, subject to eligibility
Repatriation	Proceeds generally return to Indian account	Can remain fully repatriable

Residents may need PAN, Aadhaar, FATCA documentation, bank proof, Form A2, LRS declaration and source-of-funds documentation.

NRIs typically require passport, residence or visa proof, overseas address and FATCA/CRS documentation.

Special Note for US and Canadian NRIs

US taxpayers need to be particularly careful.

Non-US pooled funds can fall under PFIC rules, which may involve Form 8621 reporting and punitive tax treatment.

Many IFSC schemes may also restrict US and Canadian investors.

Specialist tax advice is essential before investing.

GIFT City Funds Available as of 31 August 2026

Scheme	Type	Strategy	Minimum First
Parag Parikh IFSC S&P 500 Fund of Fund	Outbound	US large-cap index	$500
Parag Parikh IFSC Nasdaq 100 Fund of Fund	Outbound	Nasdaq 100	$500
DSP Global Equity Fund	Outbound	Global equity	$5,000
Edelweiss Greater China Fund	Outbound	Greater China	$5,000
HDFC AMC International IFSC schemes	Outbound	Global / feeder	Confirm
Tata India Dynamic Equity Fund	Inbound	Indian equities	$500

This is a snapshot, not a recommendation. Minimums, availability and eligibility can change through scheme addenda.

Costs, Tax and Compliance to Check

Costs

Total expenses can range from roughly 0.65% for passive strategies to more than 2% for active strategies.

Also account for:

• underlying ETF expenses;
• forex spread;
• SWIFT charges;
• GST; and
• TCS-related cash-flow impact.

Tax

Fund structures vary.

Where gains are taxable in the investor’s hands, the source note identifies:

• 12.5% long-term tax after 24 months
• short-term gains taxed at the applicable slab rate

This makes the route less suitable for short investment horizons.

Compliance

The reporting treatment of IFSC units under Schedule FA remains an area where tax professionals have differing views.

Until there is clearer guidance, disclosure is the conservative approach.

Before You Invest

GIFT City funds are relatively new and do not yet have long multi-year track records.

Also check:

• liquidity and dealing days;
• redemption settlement periods;
• total fund and underlying costs;
• forex charges;
• tax treatment;
• currency exposure; and
• scheme eligibility.

Remember that the S&P 500 and Nasdaq 100 are not interchangeable. The Nasdaq 100 is significantly more concentrated in technology.

The Bottom Line

The fall in minimum investment from $5,000 to $500 makes GIFT City outbound funds considerably more accessible for Indian investors seeking global and dollar exposure.

But the decision should begin with one question:

What are the dollars for, and by when?

Whether the appropriate allocation is 0%, 5% or 10% depends on your existing global exposure, investment horizon, tax residency, LRS headroom and tolerance for currency movements.

GIFT City is a route to global diversification – not a reason, by itself, to invest.

This article is for educational purposes only and is not an investment, tax or legal recommendation. Scheme terms, minimum investments, regulations and taxation can change. 

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Investing in India as a Non-Resident Indian can sometimes feel complicated. Documentation, KYC requirements, tax rules, currency conversion and banking restrictions can create additional steps for overseas investors.

GIFT City aims to make cross-border financial activity more efficient by bringing banking, investment funds, capital markets, insurance and other international financial services into a regulated ecosystem.

But what exactly is GIFT City, and how can NRIs use it?

This guide explains the potential benefits, investment options, tax considerations and account requirements that NRIs should understand before investing through GIFT City.

What Is GIFT City?

GIFT City stands for Gujarat International Finance Tec-City.

Located between Ahmedabad and Gandhinagar in Gujarat, GIFT City is a financial and technology business district designed to support domestic and international financial activity. It includes a Domestic Tariff Area and a Special Economic Zone that houses the GIFT International Financial Services Centre, commonly known as GIFT IFSC. 

For NRI investors, GIFT IFSC is the most relevant part of GIFT City.

GIFT IFSC is a special financial jurisdiction regulated by the International Financial Services Centres Authority, or IFSCA. It supports banking, fund management, capital markets, insurance and other financial services, with many transactions conducted in foreign currencies.

In simple terms: GIFT IFSC gives NRIs another regulated route to access India-linked and international financial products without relying entirely on the traditional domestic investment system.

Why Can Investing in India Be Complicated for NRIs?

NRIs often face additional requirements when investing in India, including:

• KYC and residency documentation
• Tax identification and reporting requirements
• NRE or NRO banking arrangements
• Currency conversion
• Cross-border remittance procedures
• Product-specific eligibility restrictions
• Withholding tax and tax-return considerations

These requirements do not disappear completely when investing through GIFT City. However, the foreign-currency framework, unified regulator and presence of international financial institutions may help streamline certain parts of the investment process.

Why Should NRIs Consider GIFT City?

Access through a unified financial regulator

Financial institutions and intermediaries operating within GIFT IFSC are regulated by IFSCA. This includes authorized banks, brokers, exchanges, fund managers and other financial-service providers.

A unified regulatory framework can make it easier for investors to understand where to verify an institution and how the financial ecosystem is supervised.

Foreign-currency transactions

Banks operating in GIFT IFSC can provide accounts and deposits in currencies such as the US dollar, euro and British pound. Many eligible investments and exchange transactions are also structured in foreign currency.

This may reduce the need for repeated currency conversion, although investors can still face exchange-rate risk when their investment currency differs from the currency in which they earn, spend or measure returns.

Access to Indian and global opportunities

Depending on the provider, product and investor eligibility, NRIs may be able to access India-focused funds, international securities, debt instruments, exchange-traded products and other cross-border investment opportunities through GIFT IFSC.

Potentially simpler investment routes

Some GIFT City products are specifically structured for non-resident and international investors. This can reduce certain domestic-market frictions, but documentation, KYC, anti-money-laundering checks and eligibility verification will still apply.

“Less paperwork” should therefore be viewed as a potential benefit rather than a guarantee.

What Can NRIs Access Through GIFT City?

The products available to an NRI will depend on the institution, investment structure, country of residence and applicable regulations.

Common categories include the following.

1. India-focused investment funds

NRIs may be able to invest in mutual fund or Alternative Investment Fund structures registered in GIFT IFSC.

These funds may offer exposure to areas such as:

• Listed Indian securities
• Private equity
• Infrastructure
• Real estate
• Debt and credit opportunities
• Other India-focused investment strategies

Fund eligibility, minimum investment amounts, liquidity and risk can differ significantly between products.

2. Global investment products

Some GIFT IFSC platforms provide access to international securities, global indices, exchange-traded funds and foreign-currency debt instruments.

This can help NRIs combine India-related investments with broader global exposure through an India-based international financial centre. Product availability should always be confirmed with an IFSCA-authorized intermediary.

3. Capital-market products

NRIs can access eligible products through exchanges and brokers operating within GIFT IFSC. Depending on the platform, these may include equities, ETFs, debt securities, derivatives and other listed instruments.

4. Foreign-currency banking

GIFT IFSC banks may offer:

• Foreign-currency accounts
• Term deposits
• International remittance services
• Cross-border banking facilities
• Certain credit or financing services

Not every service will be available to every NRI. Availability may depend on residency, documentation, bank policy and regulatory eligibility.

What Are the Tax Benefits of GIFT City for NRIs?

GIFT City is often promoted as a tax-efficient financial centre, but it is important to understand that investing through GIFT City is not automatically tax-free.

Tax treatment depends on:

• The type of investment
• The legal structure of the fund
• The security being bought or sold
• How and where the transaction takes place
• Whether payment is made in foreign currency
• The investor’s residential status
• India’s tax treaty with the investor’s country
• Tax laws in the investor’s country of residence

Certain qualifying transactions on recognized IFSC exchanges may receive exemptions from Securities Transaction Tax and Commodities Transaction Tax when the consideration is paid in foreign currency. Indian tax law also provides specific exemptions for some securities, fund structures and non-resident transactions carried out through an IFSC. 

Some non-resident investors may also receive relief from Indian PAN or income-tax-return filing requirements in narrowly defined situations, subject to conditions such as the source of income, prescribed tax deduction and the absence of other taxable Indian income. 

However, income from Indian company shares, dividends, interest or other assets may still be taxable. Official IFSCA material itself shows that tax treatment differs across fund categories and types of income.

Tax in the country of residence

Even when a gain or income receives favourable treatment in India, an NRI may still have to declare and pay tax on it in their country of residence.

For example, a country that taxes residents on worldwide income may require the investor to report GIFT City investments, distributions and capital gains.

NRIs should therefore obtain advice covering both Indian tax rules and the tax rules of their country of residence.

Do NRIs Need a GIFT City Bank Account?

Not necessarily for every product.

There is no single onboarding process that applies to all GIFT City investments. The requirement depends on the investment product and the institution offering it.

IFSCA’s guidance describes separate routes for opening a foreign-currency bank account, onboarding with an IFSC broker and selecting products from authorized fund managers. This indicates that the required arrangement can differ between banking, trading and fund investments.

An IFSC bank account may be required for certain banking services, deposits or trading arrangements. For some fund investments, the asset management company or intermediary may provide a different subscription and remittance process.

Investors should confirm the following with the provider:

• Whether an IFSC bank account is mandatory
• Which overseas bank accounts can be used
• Accepted currencies
• Remittance instructions
• Minimum investment amount
• Redemption and repatriation process
• Documents required for KYC and tax compliance

Is GIFT City Regulated?

Yes. Financial products, services and institutions operating within GIFT IFSC are regulated by IFSCA, India’s unified regulator for International Financial Services Centres.

However, regulation does not remove investment risk. Investors must still review the individual product, fund manager, broker or bank.

Before transferring money, check whether the institution appears in the official IFSCA directory of regulated entities. IFSCA specifically advises consumers to deal only with authorized entities.

What Should NRIs Check Before Investing?

Eligibility

Confirm whether the product accepts investors from your country of residence. Certain providers may restrict investors from particular jurisdictions because of local securities, tax or compliance rules.

KYC requirements

Check which documents are required. These may include:

• Passport
• Overseas address proof
• Tax identification number
• Residency declaration
• PAN, where applicable
• Bank-account proof
• Source-of-funds documentation

Indian and overseas tax rules

Understand how income, distributions, capital gains and redemption proceeds will be treated in India and in your country of residence.

Fees and charges

Review management fees, brokerage, custody charges, performance fees, exit charges, banking costs and currency-conversion spreads.

Currency risk

A foreign-currency investment can rise in value while still producing a weaker return in your home currency because of exchange-rate movements.

Liquidity

Some alternative funds may have long lock-in periods, limited redemption windows or restricted secondary-market liquidity.

Product risk

Review the underlying assets, concentration, use of leverage, investment horizon and possible loss scenarios. A product’s location in GIFT City does not make it low-risk.

Who May Find GIFT City Investments Relevant?

GIFT City may be worth exploring for NRIs who:

• Want foreign-currency access to India-related opportunities
• Are looking for India-focused funds outside the traditional domestic route
• Want to combine Indian and international investments
• Understand the risks of cross-border investing
• Can meet the relevant investment minimums
• Are comfortable with the product’s liquidity and time horizon

It may be less suitable for investors who need guaranteed returns, immediate access to their money or products with very low complexity.

Final Takeaway

GIFT City is becoming an important gateway for NRIs seeking access to Indian and global financial opportunities.

Its foreign-currency framework, unified regulator and growing range of investment products may help reduce some of the friction associated with traditional cross-border investing. However, GIFT City should not be viewed as a universal shortcut or a tax-free investment destination.

Before investing, check:

• Your eligibility
• The provider’s IFSCA authorization
• KYC and banking requirements
• Indian and overseas tax treatment
• Fees and currency exposure
• Liquidity and exit conditions
• The underlying investment risk

The right GIFT City product will depend on your financial goals, country of residence, risk tolerance and tax position.

Disclaimer: This article is for general educational purposes and does not constitute investment, legal or tax advice. Regulations, product availability and tax treatment may change. Consult qualified financial and tax professionals before making an investment decision.

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