GIFT City has emerged as a major investment and financial hub, designed to offer NRIs, OCIs, PIOs, and global investors an efficient gateway to invest in India or internationally. The city offers a transparent, tax-efficient, and globally competitive platform for financial services, banking, fund management, securities trading, and real estate investments. With its unique SEZ and DTA structure, regulated by IFSCA, GIFT IFSC provides a flexible regulatory environment, making it attractive for cross-border financial activities while remaining physically located within India. ExpertNRI serves as a trusted GIFT City investment consultant in India, guiding investors to maximize opportunities in GIFT IFSC.
Origin and vision of GIFT IFSC
In 2007, then Chief Minister of Gujarat, Narendra Modi, announced the establishment of an International Financial Services Centre in Gujarat (IFSC) with an aim to create a world-class financial hub that could compete with other centers like London, New York, Hong Kong, Dubai, Singapore, Mauritius, etc. and the Gujarat International Finance Tec-City (GIFT City) was born. GIFT City includes both a Domestic Tariff Area (DTA) and a Special Economic Zone (SEZ). The SEZ area is designated as the GIFT International Financial Services Centre (GIFT IFSC). While the DTA caters to domestic business activities, the SEZ is focused exclusively on international financial services. GIFT IFSC is regulated by an independent regulator, the International Financial Services Centres Authority (IFSCA), which has been established to develop and regulate the financial services market in the IFSC across banking, capital markets, fund management, insurance, leasing, and related services.
Regulatory and structural framework of GIFT City
While GIFT IFSC is located within India, it is considered as out of India jurisdiction for regulatory purposes. A lot of benefits and concessions in income tax, GST, Stamp Duty, FEMA, SEBI, etc. are available for entities established in GIFT IFSC and to investors using GIFT IFSC to invest in various financial securities. There has been a great push by the regulator as well as the government of India to promote GIFT IFSC as well as interest from NRIs or PIOs or OCIs to use GIFT IFSC to invest in India or globally.
Growth of the GIFT IFSC ecosystem
As of March 31, 2025, 29 banks, 83 broker/dealer, 161 Fund Management, 229 AIFs/Schemes have been registered. In addition, 5 payment service providers, 33 aircraft leasing entities, 24 ship leasing entities, 45 Insurance and Insurance Intermediaries, 91 Ancillary service providers and others with a total of 865 have already registered with IFSCA with more than 25% got their registrations approved in last 1 year.
Investment environment and banking facilities
In GIFT IFSC, the transactions take place in any currency except INR. Various investment options are available for GIFT city. Any PROI (NRI or OCI or PIO or Foreigner) can open a bank account and invest in any deposit accounts with any banks set up in GIFT IFSC. The interest rates are not regulated and the banks are allowed to keep interest rate as per the situation, circumstance, interest rate environment, internal demand/supply of foreign exchange. The deposits can be created for 7 days to even 10 years. The RBI cap limit for interest and tenure related to FCNR deposit account does not apply to the banks in IFSC.
Exchanges and listed securities in GIFT IFSC
There are mainly 3 exchanges in GIFT IFSC: IndiaINX (of BSE), NSE IX (of NSE) and IIBX (Bullion Exchange). Gain or loss on securities listed on these exchanges are not subject to income tax in India. As currently, only derivatives are listed on these exchanges, the income would be in the nature of business income and there is a income tax exemption for income earned (for 10 years in a block of 15 years) by entities set up in IFSC.
India-bound investment structures
For inbound investing, various funds have been set up are in the process of being set up. They can mainly be categorized as master fund, feeder fund or retail fund. The retail fund has not been active yet. The feeder fund is used by existing MF, PMS or AIF players to feed the funds raised through GIFT IFSC fund into their existing funds. Master funds are the funds that directly invest or trade in securities listed in India. Any non-resident (NRI, PIO, OCI, Foreigner) is allowed to invest in any India bound fund. However, an Indian resident is not allowed to invest in such funds.
Global investment opportunities through GIFT IFSC
An NRI or PIO or OCI can invest in funds that invest globally and are registered in GIFT IFSC. Indian residents can also invest out of India through a global access platform available in GIFT IFSC under LRS. The regulations relating to Global Access are being updated and currently, a consultation paper has been issued recently. The revised regulations are expected to come out in 3-6 months.
Real estate framework in GIFT City
All immovable properties in GIFT City are available on lease hold basis for 99 years. Many Investors are also looking for investments in residential or commercial properties on the long-term lease basis.
Tax treatment for non-residents and residents
Income from investments in GIFT IFSC could be rent interest, dividend, profit (or loss) on trading of securities or capital gain. There is no Income Tax, Capital Gains Tax for non-resident investors or funds on the interest, dividend, or business income on trading of securities listed on exchanges in GIFT IFSC. So NRIs or PIOs or OCIs looking for investing in funds that invest in direct shares of Indian companies would be subject to long term and short-term capital gains. However, the investors may not have to pay any tax as the tax will be paid at the fund level. Any fund that invests or trades in derivative instruments listed on exchanges in GIFT IFSC, there won’t be any tax on the business income. So, such funds will be able to pass on the tax saving to the investors. NRI, PIO or OCI Investors in mutual funds set up as a feeder fund in GIFT IFSC are currently enjoying the true tax-free income as there is no capital gain in GIFT IFSC and the mutual funds in India are exempt from tax for buying and selling of securities in India. As global income is taxable for an Ordinary Resident, income from GIFT IFSC would also be subject to income tax in India for Ordinary Residents.
GIFT City IFSC stands out as India’s strategic financial gateway, providing a tax-efficient, flexible, and globally aligned platform for domestic and international investors. With its growing ecosystem, multiple investment avenues, offshore regulatory status, and long-term real estate opportunities, GIFT IFSC continues to attract global capital and facilitates seamless investment in India and beyond. This makes it a key pillar in India’s financial infrastructure, bridging global investors with the country’s expanding markets and contributing significantly to the growth of India’s international financial services landscape.
