GIFT City is India’s window to the world. Here’s what it offers NRIs.
Imagine what happens when a nation that is used to potholed roads builds a superhighway for the first time. That is precisely what India has done with Gujarat International Finance Hi-tec City or GIFT City, near Ahmedabad in terms of its financial system.
The old system
Currently NRIs are forced to invest in India through a maze of accounts - Non-Resident Ordinary (NRO), Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) each with its own set of rules. Investment in stocks had to be made via the Portfolio Investment Scheme (PIS) route or non-PIS route. NRIs also face TDS deductions on NRO interest or capital gains on their stocks and mutual funds.
What GIFT offers
GIFT City offers freedom from all these restrictions. There is no concept of NRO or NRE in GIFT City. You can directly remit funds to a GIFT fund from abroad and start investing. GIFT IFSC funds are dollar denominated even though the underlying assets are in Indian rupees. Hence you don’t have to convert currency and face applicable charges if you are transferring US dollars. There is also no tax on GIFT City inbound funds investing into domestic mutual funds. Gains made by NRIs are not subject to any TDS. Similarly you can earn tax-free interest in US dollars in GIFT. Your country of residence will tax you on this but in countries without income tax like UAE this is a major benefit.
How to invest
The GIFT regulator (IFSCA) has permitted video KYC for NRIs from certain countries including the UAE provided you have an Aadhar Card. KYC is done by the fund you are investing in or the bank/fintech you are opening an account. Once your KYC is done you can either open a bank account in GIFT or simply remit money into a GIFT fund. Most of these are AIFs with a minimum 150k USD ticket size. However there are some retail funds too like Tata Dynamic Equity Fund with a ticket size as low as USD 500. You can freely redeem the money from GIFT whenever you want - there are no capital controls by India.
Points to note
GIFT City is a superhighway for NRIs and foreign investors into India. But if you return to India you may need to redeem your GIFT inbound funds since they are generally only open to NRIs. Before you return, consult a Sebi registered financial advisor. You can redeploy the money in ordinary Indian mutual funds or keep the money outside India in dollar investments in GIFT or elsewhere.
Most Asked Questions About GIFT City for NRIs
What is GIFT City and why should NRIs care about it?
GIFT City (Gujarat International Finance Hi-tec City) is India’s new international finance hub that simplifies NRI investing by removing the need for NRO/NRE distinctions and offering a cleaner, more flexible route into Indian assets.
How does GIFT City differ from traditional NRI investment accounts (NRO, NRE, FCNR)?
Traditional NRI investing uses multiple account types with separate rules, while in GIFT City there is no NRO/NRE concept and NRIs can directly remit money into GIFT funds and invest without that maze of structures.
What are the tax advantages of investing through GIFT City?
GIFT City allows zero tax on inbound funds investing into domestic mutual funds, no TDS on NRI gains, and tax-free dollar interest within GIFT, subject only to tax in the country of residence.
Do I need to convert currency when investing in GIFT City?
No, GIFT IFSC funds are dollar-denominated (even though they invest in INR assets), so NRIs sending USD do not need to convert to rupees or pay related conversion charges.
How do I open a GIFT City account as an NRI?
Eligible NRIs (for example from UAE) can complete video KYC if they have Aadhaar, after which a bank, fund or fintech partner opens an account or accepts direct remittance into a GIFT fund.
What is the minimum investment amount required in GIFT City?
Many GIFT vehicles are AIFs with minimums around USD 150,000, but some retail-oriented funds have much lower minimums, sometimes as low as a few hundred dollars.
Can I withdraw my money anytime from GIFT City funds?
Yes, GIFT City works without Indian capital controls on such investments, so NRIs can redeem and repatriate freely, subject only to fund-specific exit terms.
What happens to my GIFT City investments if I return to India as a resident?
Most GIFT inbound products are restricted to NRIs, so on returning to India you may need to redeem and then redeploy into ordinary Indian mutual funds or other suitable structures after consulting a registered advisor.
Are there any capital controls or restrictions on moving money in or out of GIFT?
India does not impose capital controls on these GIFT investments, so NRIs can send money in and take money out, within the general foreign exchange framework and fund rules.
Should I move all my NRI investments to GIFT City?
GIFT City is powerful for new money and for simplifying taxation, but whether to move everything depends on your existing holdings, costs, tax position and country of residence, so it should be decided with a qualified advisor.
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