Funds in GIFT City (India's IFSC) take money in foreign currency, so you pay from your the UAE bank account and hold units in dollars. No rupee conversion on the way in or out. Regulated by IFSCA, not SEBI.
What it is
GIFT City in Gujarat hosts India's IFSC, a financial zone that works in foreign currency under its own regulator, IFSCA. Funds there take subscriptions in dollars (or other currencies) from investors abroad and invest in Indian markets, global markets or both. As an NRI you pay from your UAE, UK or Singapore bank account; nothing is converted to rupees unless the fund itself invests in India.
Who it's for
Someone who wants their savings to stay in a hard currency, with or without India exposure, and who prefers not to open NRE and NRO accounts just to invest. Also useful if you expect to need the money abroad rather than in India.
What it needs from abroad
KYC with the fund, a FATCA/CRS declaration and a bank account in a freely convertible currency. No Indian bank account is needed. Whether an IFSC fund accepts US persons is set by its own offer document, so it depends on the fund.
Risks and catches
The same market risk as any fund, plus a currency question turned on its head: if the rupee strengthens, a dollar fund investing in India gains, and the reverse. Minimums for restricted schemes are high. The product range is younger and smaller than onshore funds, and liquidity terms vary a lot.
Tax, for an NRI
Income a non-resident earns from, or on transferring units in, a GIFT City IFSC specified fund — such as a Category III AIF — can be left out of total income in India, where the fund meets the conditions the Income-tax Act, 2025 sets for a specified fund. Your country of residence may still tax you.
Ask Rohit
A question about what you just read? Ask it here, in your own words.
Thanks for asking. You'll get a reply on WhatsApp, in Indian working hours, usually the same day. If it needs a longer conversation, we'll set up a call with Rohit.
Replies come from +91 92177 10588.