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GIFT City - India's Gateway to Global Finance

What is Gift City?

GIFT City, which stands for Gujarat International Finance Tec-City, is India’s first International Financial Services Centre (IFSC) and smart city in the Gandhinagar district of Gujarat, India[1].

Its primary purpose is to establish India as a global financial and technology hub, attracting international businesses and investments.

The idea is to provide an infrastructure for easy capital flows, dollar-denominated investments, and a regulatory architecture that mirrors international standards. 

What is the meaning of GIFT IFSCA?

Gift City has a regulatory body called The International Financial Services Centers Authority (IFSCA) which plays a pivotal role in overseeing and regulating the overall functioning of Gift City.

It was established on April 27, 2020 under the International Financial Services Centres Authority Act, 2019. It is headquartered at GIFT City, Gandhinagar in Gujarat. The main objective of the IFSCA is to develop a strong global connect and focus on the needs of the Indian economy as well as to serve as an international financial platform for the entire region and the global economy as a whole.

How to invest through GIFT City?

GIFT City, being India's first International Financial Services Centre (IFSC), offers a unique and attractive environment for various types of investors, both Indian residents, NRIs (Non-Resident Indians), and foreign entities.

Here's a breakdown of how you can invest in GIFT City, categorized by investor type and investment avenue:

For Resident Indians (Retail Investors):
While GIFT City primarily facilitates cross-border transactions in foreign currencies, resident Indian retail investors can still access global investment opportunities through GIFT City, subject to the [2]Liberalised Remittance Scheme (LRS) of the RBI. The LRS allows Indian residents to remit up to USD 250,000 per financial year for permissible capital and current account transactions.

Here are the common avenues for resident Indian retail investors:

NSE International Exchange (NSE IX): This subsidiary of the National Stock Exchange of India (NSE) is located in GIFT City and provides a gateway to invest in global markets.

Alternative Investment Funds (AIFs): While AIFs typically have higher minimum investment thresholds, some cater to resident Indians. These funds pool money from various investors to invest in a diverse range of assets.

  • Minimum Investment: For individual investors, the minimum investment in AIFs is ₹1 crore, with a lock-in period of three years. For employees or directors of AIFs or fund managers, the minimum is ₹25 lakhs.
  • Categories: AIFs are diversified into Category I (startups, ventures, infrastructure, SME funds), Category II (private equity and debt funds), and Category III (hedge funds and similar venues).

For Non-Resident Indians (NRIs) and Foreign Investors:

  • IFSC Banking Units (IBUs):
    Global Savings Accounts:     NRIs can open multi-currency global savings accounts (USD, GBP, EUR, CAD, AED, AUD, SGD, HKD, etc.) to park surplus funds and earn competitive interest rates.
    Loans: Financial institutions in GIFT IFSC offer loans against FCNR/NRE deposits, deposits with international branches, or ICICI Bank IBU GIFT City Deposits for various purposes.
  • Alternative Investment Funds (AIFs) & Portfolio Management Services (PMS):
    • NRIs and foreign investors have wider access to AIFs and PMS that are specifically designed for global investments, often allowing for diversification into international assets (equities, debt, real estate, bullion, etc.).
    • Minimum Investment for AIFs: Generally, an investment of above USD 150,000 (with a lock-in period of three years) is common for AIFs[3].
    • Tax Benefits: Potential tax savings on capital gains and other income from these investments (especially if the investments are made in securities outside India).
  • Direct Investment in Capital Markets: Through IFSC exchanges (like NSE IX), NRIs and foreign investors can directly trade in a variety of products, including:
    • Equities, derivatives, and debt instruments.
    • International stocks (often through UDRs for US stocks).
  • India International Bullion Exchange (IIBX): Invest in bullion (gold, silver) through this exchange, which aims to be a major global bullion trading hub.


Role of IFSCA:
The International Financial Services Centres Authority (IFSCA) plays a pivotal and unique role in the development and regulation of financial services within India's International Financial Services Centres (IFSCs), with GIFT City being the first and currently only operational one.

Here's a breakdown of its key roles and functions:

1. Unified Regulator:

This is perhaps the most significant aspect of IFSCA. Before its establishment in April 2020, financial services in IFSCs were regulated by multiple domestic regulators:

  1. Reserve Bank of India (RBI) for banking.
  2. Securities and Exchange Board of India (SEBI) for capital markets.
  3. Insurance Regulatory and Development Authority of India (IRDAI) for insurance.
  4. Pension Fund Regulatory and Development Authority (PFRDA) for pensions.

Single Window: The IFSCA now acts as a unified authority, bringing all these regulatory powers under one roof for activities within the IFSC. This eliminates regulatory arbitrage, simplifies compliance, and offers a "single window clearance" for entities looking to set up and operate in GIFT City. This unified approach is crucial for promoting ease of doing business and attracting global players.

2. Development and Promotion:

  • Strategic Vision: Beyond just regulation, IFSCA has a mandate to develop the IFSC. Its main objective is to establish a strong global connection and position GIFT City as a premier international financial platform for the entire region and the global economy.
  • Attracting Global Players: It actively works to attract global financial institutions, IT companies, and other businesses to set up operations in GIFT City by:
    • Offering fiscal and regulatory incentives.
    • Promoting India's financial sector on the global stage.
  • Ecosystem Building: It fosters a robust ecosystem that supports the growth of various financial services, including banking, capital markets, insurance, asset management, and new-age financial technologies (FinTech).


Regulation and Supervision:

  • Rule-making: IFSCA is empowered to frame regulations, rules, notifications, circulars, and guidelines for the conduct of financial services and products in the IFSCs. This covers a wide spectrum of activities, including:
    • Banking: Establishing and operating IFSC Banking Units (IBUs), cross-border lending, trade finance, treasury operations, multi-currency accounts.
    • Capital Markets: Regulation of stock exchanges (like NSE IX), clearing corporations, capital market intermediaries, issuance of securities (bonds, equities, depository receipts), and listing.
    • Fund Management: Oversight of Alternative Investment Funds (AIFs), Venture Capital Funds (VCFs), Portfolio Management Services (PMS), and other collective investment schemes.
    • Insurance: Licensing and regulation of IFSC Insurance Offices (IIOs) and intermediaries, enabling global risk capacity and innovative insurance products.
    • FinTech: Creating a supportive environment for FinTech entities, including regulatory sandboxes for testing innovative solutions.
    • Other Services: Aircraft and ship leasing, bullion trading (through India International Bullion Exchange - IIBX), and other ancillary services.
  • Licensing and Approvals: It grants approvals and licenses to entities wishing to operate in the IFSC, ensuring they meet the necessary criteria.
  • Dispute Resolution: It plays a role in resolving disputes arising from financial transactions within the IFSC, aiming for efficient and transparent mechanisms, including access to international arbitration.

Conclusion

In essence, GIFT City is a strategic initiative by India to create a world-class financial and technological ecosystem with a unique regulatory environment and attractive incentives to draw global businesses and talent, making it a significant player in the international financial landscape.

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

Published on July 17th, 2025

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