The Policy Push Behind GIFT City’s US$19.66 Billion Investment Surge

In March 2025, cumulative investments in GIFT City stood at US$8.07 billion. By March 2026, the investments had surged to US$19.66 billion. 

And the reasons: the IFSCA (Fund Management) Regulations, 2022, introduced by the International Financial Services Centres Authority (IFSCA), its subsequent amendment in 2025, and other crucial policy decisions. 

Key Policy Decisions

Unlike the regulations of the national equity markets regulator, the Securities and Exchange Board of India (SEBI), the IFSCA (Fund Management) Regulations regulate Fund Management Entities (FMEs), a practice followed at similar global financial centres such as Singapore and Dubai.

Tax norms have also been brought on par with global peers. The registration process has been simplified, with applications for SEZ and IFSC approvals received through a single window. FMEs can now also obtain licences to begin operations in about 40 days. Earlier, the process could take anywhere between two and three months.

The Budget for FY2026-27 increased the tax holiday from 10 years out of the first 15 years to 20 years out of the first 25 years. Thus, the benefits have been extended by 10 years. The Budget for FY2022-23 also saw capital gains exemptions for mutual funds relocating to GIFT City, encouraging migration from other international tax havens. 

Major Changes (2022–2026)

A Special Purpose Vehicle (SPV) can now be set up by a fund. This SPV allows other investors to put their money into the same investments made by the fund, enabling them to participate directly through co-investment.

The fund can borrow money, or take leverage, through the SPV instead of directly, giving it greater flexibility in managing investments.

Earlier, Venture Capital and Restricted Schemes — a type of non-retail investment fund meant only for sophisticated or accredited investors, with stricter rules and higher minimum investment requirements than retail schemes — had to update their Private Placement Memorandum (PPM) every six months. They can now keep it valid for 12 months.

The minimum fund size required has been reduced to US$3 million, making it easier for smaller funds to start operations.

If a PPM expires, fund managers can re-submit it with lower fees and only limited changes, instead of starting the process from scratch.

Earlier, only fund managers based within GIFT City could run schemes. Now, local fund managers (FMEs) can manage schemes on behalf of outside fund managers, even if those managers do not set up an office in GIFT City. This effectively creates a platform through which overseas or Indian fund managers can plug into and operate schemes through an FME already registered in GIFT City.

 

“The rise of the fund ecosystem in GIFT IFSC is a defining milestone in the evolution of India’s international financial centre. What began as a platform for international banking and capital markets is now developing into a full-fledged global fund-management hub, bringing together fund managers, institutional investors and global capital. The next phase will be about building scale, depth and global connectivity—positioning GIFT IFSC as a trusted gateway for global capital into India and for Indian capital to access global opportunities,” said Dipesh Shah, Executive Director at IFSCA.

The next phase will be about building scale, depth and global connectivity

– Dipesh Shah, Executive Director at IFSCA

Major mutual fund operators such as Aditya Birla Sun Life AMC, DSP Fund Managers, Edelweiss AMC, Parag Parikh Financial Advisory Services (PPFAS), The Wealth Company and several others have launched funds or Fund-of-Funds (FoF) structures to attract global investors, NRIs, and institutional capital.

DSP Fund Managers has so far raised close to US$52 million and invested almost all of it. It invests mostly in the equities of global giants such as Meta and TSMC.

“GIFT City enables risk diversification by investing in equities abroad, a relief when the Indian equity market is giving low returns. It also offers diversification in currency and sectors, where investment options are limited in India but more abundant at other hubs. The proactive approach of the regulator has also increased the confidence of investors,” said Jay Kothari, ED and Global Head – International, DSP Fund Managers.

Siddharth Shah, Partner and Head – Funds at Khaitan & Co., has witnessed the emergence of GIFT as India’s only liberalised regime for financial transactions. He told The Secretariat that doubts regarding GIFT City being a credible regime have now been resolved, providing major relief to investors.

“Overseas destinations rely on tax treaties, while GIFT is governed by a domestic law and people have found comfort with it. The questions about uncertainty no longer exist. It is now a trusted regime. Now you can set up fund structures out of GIFT City,” he said.

One major evolution is the shift from simply bringing capital onshore to becoming a true global centre for both inbound and outbound investments.

Fund managers at GIFT IFSC say awareness, particularly among NRIs and resident HNIs, about GIFT City has been rising, bringing more players into the ecosystem. They are increasingly using GIFT City to raise funds for investments. Earlier, funds were raised mainly for inbound investments; now, funds for outbound investments are also being raised.

“The Ease of Doing Business and friendly regulations are helping fund managers raise funds from GIFT City and invest. Some simplification in KYC norms can make things easier and onboarding simpler, attracting more investors,” said Vaibhav Shah, Associate Director, Head – Business Strategy, Products and International Business at Mirae Asset Investment Managers India Pvt Ltd, which also operates from GIFT City.