India has, in recent years, taken bold steps to establish itself as a global financial centre, a journey strongly influenced by the vision and initiatives of Prime Minister Mr. Narendra Modi. One of the most ambitious initiatives in this direction is the Gujarat International Finance Tec-City (GIFT City), which was conceived in 2007 when Mr. Narendra Modi was the Chief Minister of Gujarat. GIFT City represents a gateway to unique investment opportunities for NRIs with significant tax and regulatory advantages. This blog explores everything you would want to know about investing in GIFT City, with a particular focus on why it has gained increasing traction among NRIs.
How GIFT City was conceived
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 centres 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 Domestic Tarriff Area (DTA) and SEZ (Special Economic Zone). The SEZ area is known as GIFT International Financial Services Centre (GIFT IFSC). The GIFT IFSC is regulated by an independent regulator International Financial Services Centre Authority (IFSCA) to develop and regulate the financial services market in the IFSC.
Unique regulatory positioning
While physically located in India, GIFT IFSC is considered outside of India’s jurisdiction for regulatory purposes. This distinctive positioning brings multiple benefits for both businesses and investors, including:
- Concessions and exemptions in income tax, GST, Stamp Duty, FEMA, and SEBI regulations.
- Access to global markets with reduced compliance burdens.
- Attractive incentives designed specifically for non-resident investors.
Such features have made GIFT City a magnet for global institutions and NRI investors seeking a balance of Indian growth opportunities with international standards.
Growth of GIFT IFSC
The pace of growth in GIFT IFSC has been remarkable. As of March 31, 2025, the registrations stood as follows:
29 banks
83 broker/dealers
161 fund management entities
229 AIFs/schemes
5 payment service providers
33 aircraft leasing entities
24 ship leasing entities
45 insurance and insurance intermediaries
91 ancillary service providers
In total, 865 entities had registered with IFSCA, with more than 25% obtaining approvals in the last year alone. This demonstrates not only regulatory support but also a growing recognition of GIFT IFSC as a credible and attractive financial destination.
Investment opportunities in GIFT City
In GIFT IFSC, the transactions take place in any currency except INR. Various investment options are available for GIFT city.
- Bank FD
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.
- Securities listed on IFSC exchange
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
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
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
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.
Income and Taxation in GIFT IFSC
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. Currently, only the exchange derivatives are listed on the exchange. The company shares are not listed. 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. The rent, interest, dividend will be taxed as per tax slab.
Why NRIs should consider GIFT City investment
The combination of Indian market access, global exposure, and favourable taxation makes GIFT IFSC uniquely suited to NRI investors. Whether through deposits, funds, securities, or real estate, the range of options is only expanding. Moreover, the Indian government’s consistent support, combined with rapid institutional adoption, ensures that the ecosystem will continue to only grow stronger.
Expert guidance is invaluable
When it comes to GIFT City investment, expert guidance becomes invaluable. Navigating regulatory frameworks, tax implications, and investment structures can be a complicated procedure. This is where ExpertNRI can help, by offering specialized advisory services to help NRIs, PIOs, and OCIs evaluate opportunities in GIFT City, ensuring that their portfolios are both compliant and optimized for maximum benefit.
In conclusion, GIFT City is more than just a financial hub; it is India’s bold attempt to position itself alongside the world’s leading centres. For those looking to invest, it represents a rare confluence of opportunity, flexibility, and tax efficiency. From bank deposits and securities trading to real estate and global funds, the avenues for investment are only expanding, and GIFT City is set to become a cornerstone of NRI wealth strategies.
