How GIFT City is becoming a gateway for capital flows into India

As you drive from Ahmedabad towards Gandhinagar, you see a shiny new city rising along the banks of the Sabarmati river. The region, once dotted by green fields, is rapidly emerging as a gateway for global capital as new multi-storey towers soar into the sky across the 886-acre Gujarat International Finance Tec City (GIFT City), the first ground-up smart city in India which hosts the country’s only International Financial Services Centre (IFSC).

GIFT IFSC, while onshore, is considered a foreign jurisdiction, and offers companies various tax incentives. Conceived 20 years ago when Narendra Modi was the Chief Minister of Gujarat as the hub of global capital, both in-bound and outbound, GIFT City is emerging as a serious competitor on the global stage, dominated by countries such as Singapore, Dubai and Mauritius.

Consider this: Since December 2023, banking assets in GIFT City have doubled to $106 billion (December 2025). The monthly turnover on its exchanges is up from $79 billion to $91 billion. And it now boasts 202 fund management entities, up from 83 in 2023.

Investors, for whom GIFT City is opening the doors to international investing, are not complaining. Last year, the benchmark Nifty50 gained close to 11%. Double-digit returns in a volatile year are good, right? Not if you look elsewhere. South Korea’s Kospi index was a standout and rallied 76% as global investors chased AI-related investment ideas. Even the Nasdaq 100 rose 21%.

Most Indian, especially retail, investors would have missed out on these opportunities in other countries as industry-wide limits imposed by the Reserve Bank of India (RBI) and Sebi have paused fresh inflows into most international funds. There is an industry-wide limit of $7 billion on the amount Indian mutual funds can invest in overseas securities, apart from a separate $1 billion cap on investments in exchange-traded funds (ETFs). The IFSCA (International Financial Services Centres Authority) Global Access Provider licence enables brokers to set up operations in GIFT to access global markets.

This framework positions GIFT IFSC not merely as a trading venue but as India’s regulated gateway to global capital markets, aligned with international standards and best practices, says India International Exchange IFSC (India INX), a subsidiary of BSE, according to says Vijay Krishnamurthy, the MD and CEO of India INX.

 

The global access platform will allow Indian investors to directly invest in US-listed stocks and ETFs. NSE IX, a subsidiary of the NSE, has already carried out a soft launch of the platform and has been testing it out for more than a month. It is likely to go for a full launch soon. “Around 12,000-15,000 accounts were opened with us during the soft launch. We want this platform to scale up to support a few million users,” V Balasubramaniam, MD and CEO of the NSE International Exchange, tells BT. The exchange is already in touch with 40-50 referral partners (entities who bring new clients to a trading member). “The US is already live. In another couple of months, we should be able to add another 20-25 venues. We will cover the major ones like Europe, Japan, Hong Kong, Korea and Australia,” says Balasubramaniam.

Resident Indians are permitted to take out $250,000 each financial year under the Liberalised Remittance Scheme. Earlier, they may have invested via Singapore, Dubai or even Mauritius. Now, fund managers are launching alternative investment funds (AIFs) in GIFT IFSC to cater to the growing demand from resident as well as non-resident Indians. According to data from IFSCA, 208 fund management entities and 349 AIFs have registered in GIFT City, with total targeted corpus of over $80 billion. The operational funds have already raised commitments worth $32 billion, of which $14 billion has been deployed in India.

Sachin Sawrikar, managing partner, Artha Bharat Investment Managers, says GIFT IFSC has moved past the experimentation phase into a period of sustained institutional growth. “The increase in the number of fund managers, active funds, and capital deployment reflects a structural shift rather than a policy-driven aspiration. Regulatory certainty from IFSCA, a competitive and predictable tax framework, and India’s expanding engagement with global capital have positioned GIFT as a credible alternative to international offshore jurisdictions,” he says.

Artha Bharat is among the few fund managers in GIFT City that run outbound investment strategies for non-resident investors. It manages over $750 million from its GIFT City and Mauritius entities. Its US equity long-short fund is already operational in GIFT. It is now launching a gold fund using IIBX (India International Bullion Exchange) and IIDI (India International Depository IFSC) infrastructure. It is also working on a structure where there could be a feeder fund in GIFT that will invest in master funds domiciled in jurisdictions like Mauritius, offering global opportunities for resident Indian investors.

 

South Korean fund manager Mirae’s Indian arm, Mirae Asset Investment Managers India, also offers a global allocation fund, a restricted (non-retail) scheme classified as an AIF.

Vaibhav Shah, Head, Products, Business Strategy and International Business, Mirae Asset Investment Managers, says the fund has received a good response with close to $70 million in AUM. “Last month alone, we got $40-45 million. Despite the volatility in equity markets, the flow was strong and we could buy at the bottom,” says Shah.

Mirae plans to launch a retail-focused outbound fund from GIFT that will allow a significantly larger set of domestic investors to channel money abroad. But it is prioritising the AIF, which is getting good response from family offices and institutional investors, says Shah. It also plans to launch ETFs.

Several other fund houses have also launched their outbound funds through GIFT City. DSP Asset Managers’s Global Equity Fund is targeting retail investors; the minimum investment is $5,000.

Exchanges like India INX are also expanding their offerings to include listing and trading of ETFs, direct equity of Indian and foreign companies, mutual fund offerings, and increased tie-ups with international brokers. Fund houses are also trying to tap into the large NRI audience.

 

GIFT City At a Glance…

 

Q. What is GIFT City?

Gujarat International Finance Tec-City, or GIFT City, in Gujarat’s Gandhinagar is the first ground-up smart city in India which hosts the country’s only International Financial Services Centre.

 

Q. Who owns and runs it?

GIFT City is a public-private-partnership (PPP). GIFT City Ltd, a Gujarat government-owned company, has been entrusted with developing the city. Earlier, a joint venture with IL&FS, Gujarat Urban Development Company Ltd., acquired its 50% stake in 2020.

 

Q. How big is it?

It is spread over 886 acres, which includes 261 acres of special economic zone (SEZ) hosting the IFSC and 625 acres for the domestic tariff area, which is the non-SEZ zone designed for businesses focused on the domestic market.

 

Q. How is it being developed?

Private players, including some large real estate developers, have property developments. Social infrastructure is also being scaled up. Lilavati Hospital is coming up. Accor Hotel is already there. The GIFT City Club is managed by Radisson. Hyatt will open a five-star hotel. Other facilities like schools, parks are also being developed.

The city has state-of-the art civic infra, including a fully automated waste management plant and collection via a network of chutes and pipelines. It also centrally cooled.

 

Q. What is the aim behind setting up GIFT City?

The government wants to make GIFT City the gateway to global capital by rerouting the flow of financial services, whether in-bound or out-bound, a lot of it currently happening offshore in other countries, whether its Singapore or Dubai or Mauritius.

Q. What is the revenue model?

The revenue generation is primarily via development, leasing and management of Infrastructure.

 

Q. What are the benefits for Companies?

GIFT IFSC, while onshore, is considered a foreign jurisdiction. Companies get various tax incentives like a 20-year tax holiday out of a 25-year block and a foreign currency settlement system that allows a real-time mechanism for settling foreign currency transactions that earlier used to take two-three days. There is a unified regulator in International Financial Services Centres Authority.

 

Q. Who all can invest?

Indians who wish to invest abroad can transfer up to $250,000 under LRS (liberalised remittance scheme) each year through several asset managers who have AIFs (alternative investment funds) that invest in foreign jurisdictions. Foreign investors and non-resident Indian can also invest in India.

NRIs also buy insurance through GIFT City insurance entities. Doors have also been opened for foreign companies from a few jurisdictions to list on exchanges in GIFT City or raise capital via bonds.

 

Q. What are the various areas of interest that are being promoted in GIFT City?

Banking, fund management, capital market intermediaries, market infrastructure institutions, insurance, aircraft and ship leasing, biotech, fintech and tecfin are some of key areas that are being given a push. Doors have also been opened for foreign universities.

 

The Global Scene

IFSCA wants GIFT to become a platform where foreign investors can use the structures here to invest globally. “The tax and policy structure will enable a foreigner to invest in a structure here and from this structure to anywhere in the world. So, global in, global out. It has started in a small way. We believe this will grow as trust and confidence builds up,” K. Rajaraman, the chairperson of IFSCA, tells BT.

A key enabler of the growth over the past five years has been the establishment of IFSCA as a common regulator, operational since April 2020. It consolidates powers earlier divided among RBI, Sebi, insurance regulator IRDAI, and the PFRDA.

The benefits to investors include a 10-year income tax holiday out of a 15-year block, extended to 20 consecutive years out of 25 years in the Budget this year. There is no securities transaction tax or commodities transaction tax and specific securities are exempted from capital gains tax. Offshore services are exempt from GST. Also, entities in GIFT IFSC are considered non-resident and, therefore, can transact freely in foreign currency.

 

Just as GIFT City is emerging as a platform for inbound and outbound investments, banking assets have also grown significantly. Corporates are also using it to raise debt. Total banking assets as of February were $106.7 billion, a seven-fold increase from around $15 billion in 2020, says Rajaraman. There are 37 banks registered in GIFT IFSC, including 20 foreign ones. A large part of the external commercial borrowings is being routed through GIFT IFSC, he says.

Cumulative debt listings on international exchanges in GIFT IFSC, with over 200 bonds, had raised over $70 billion as of February. Trading on international exchanges has also been picking up. In March, GIFT Nifty futures clocked the highest monthly turnover of $129.8 billion.

Sebi, on May 5, released a consultation paper proposing to allow online bond platform providers (OBPP) to offer products regulated by GIFT IFSCA. This could enable OBPPs to access overseas listed debt securities through IFSC, thus expanding their offerings.

“Accessing global bond markets via IFSC will establish parity of asset classes and enable investors to further diversify their international portfolios,” says Aditi Mittal, co-founder of IndiaBonds.

However, primary market fund-raising is yet to take off. The $12 million issue of executive education platform XED, the first such public issue in GIFT IFSC, was scrapped recently due to poor response amid the uncertainty fuelled by the conflict in West Asia. Experts feel there is a need to deepen market liquidity to compete globally.

GIFT City’s primary competition is Asian jurisdictions like Dubai. Dubai International Financial Centre (DIFC) has 2,525 active registered companies. The number rose 39% in 2025. It has 1,052 regulated firms, making it one of the most significant financial ecosystems. The number of wealth and asset management companies rose 22% last year to more than 500. Focusing on new technologies, DIFC has attracted 1,677 AI, fintech and innovation focused entities, with a 35% rise in 2025.

Family-related entities in DIFC rose 61% last year. The family businesses alone are estimated to have over $1 trillion in assets, according to DIFC. Dubai ranks seventh on the Global Financial Centres Index. In comparison, GIFT City ranks 46th. Clearly, the greenfield hub has a long way to go.

 

What is slowing GIFT?

One issue that is slowing down GIFT City’s growth is KYC of foreign investors, say experts. India follows strict KYC and anti-money laundering norms. Non-resident investors need to submit physical applications and supporting documents for KYC, which adds cost and time. A few months ago, IFSCA started allowing video KYC, but it’s still only for NRIs; even after a video KYC, physical documentation is required.

Rajesh Gandhi, partner at Deloitte India, says, “The regulatory and tax framework for funds in IFSC is highly conducive and globally competitive, on par and even better in certain aspects as compared to jurisdictions such as Mauritius, Ireland and Cayman Islands.” He adds that the approval process is also well streamlined with faster turnaround timelines.

“One of the big issues is video KYC of foreign investors. If we want subscriptions from non-resident investors, we will have to create a methodology where we can take their local tax number as a validation source. Also, some more improvements will have to come through under our KYC client due diligence regulatory norms,” says Balasubramaniam of NSE IX. Certain jurisdictions allow omnibus accounts, essentially pooled accounts, where a financial intermediary or broker combines assets of multiple investors. The transactions get registered in the name of the intermediary and end-investor details remain private.

Rajaraman of IFSCA says PMLA adherence is non-negotiable and, therefore, there is a challenge with omnibus accounts as details of end investors are not available. While certain conditions are non-negotiable, how KYC can be made simpler for retail investors is something the IFSCA is looking at, he says.

 

“We recently set up a working group to allow face authentication for NRIs also. This group is working on a pilot with the UAE and I think the US as well. We will test-protocol it and I think launch in six months. That will be unassisted, that is, I will be able to look into my mobile phone and create an account. At present, you can do an assisted video customer identification process, where you need to launch a video call with a fund manager here,” says Rajaraman.

Separately, the IFSCA has authorised CDSL Ventures, a subsidiary of Central Depository Services India Ltd, as a KYC registration agency. Once it’s operational, investors won’t have to do multiple KYCs, he says. Rajaraman points at plans to onboard more payment service providers to open access to more jurisdictions.

Unexpected changes in rules in India are another concern. A classic case is what happened in bullion trading last financial year. In March 2025, volume of gold traded on IIBX in GIFT IFSC crossed 100 tonnes. That was significant, as in FY24, volumes were just around eight tonnes. However, volumes plunged in 2025-26, even as gold prices were surging. This was due to a tussle over allocation of import quotas (tariff rate quotas under the India-UAE Comprehensive Economic Partnership).

“We were confident of doing around 130 tonnes in FY26. However, unexpected policy changes and then affected parties going to court hurt bullion trading last year,” Ashok Gautam, the MD and CEO of IIBX, tells BT. He explains that the DGFT gave only provisional quota initially and put in a clause that anyone with a turnover below Rs 25 crore would not be considered. The matter went to court, and by the time the order came, it was September, he says. The DGFT, to widen the participation, cancelled the quota and decided to go for competitive auctions. That has been challenged in the Rajasthan High Court.

GIFT IFSC can take advantage of the US-Israel war on Iran, which has raised question marks over Dubai’s reputation as an island of peace and stability, say experts. “Global capital gravitates towards stability rather than volatility, and India’s strategic autonomy, macroeconomic resilience, and democratic institutions position it as safe haven,” says Krishnamurthy. He adds deepening market liquidity, expanding product ecosystem, strengthening ease of doing business and building a global talent will go a long way in making GIFT City attractive.

One issue is lack of social infrastructure and lifestyle facilities. But things are changing, say consultants. A new hotel is coming up, there is metro rail connectivity to Ahmedabad, there is a school, and the Lilavati Hospital is setting up a super speciality facility. Also, several foreign universities like Deakin of Australia and Queens University of Belfast have set up campuses there. A riverfront is also being developed, says Rumit Parikh, senior director and retail branch head (Ahmedabad) at Knight Frank. “We are seeing a huge pickup in real estate, particularly residential, in areas in and around GIFT City,” he adds. IFSCA Chairperson Rajaraman says India has the execution capability to develop a greenfield IFSC. The vision is now to make GIFT IFSC a dominant gateway for capital flows into India and leverage India’s talent advantage to become a strong exporter of international financial services.    

      

@thenachiket