GIFT City: Empowering NRIs to Connect with India’s Growth

India’s first International Financial Services Centre (IFSC), GIFT City (Gujarat International Finance Tec-City), is fast becoming a key hub for non-resident Indians (NRIs) looking to connect with and contribute to their homeland’s growth story.

With the Indian Diaspora exceeding 35.4 million, remittances and investments from NRIs play a crucial role in shaping the nation's financial landscape. Positioned with investor-friendly regulations, a competitive tax regime, and a robust policy framework aligned with global standards, GIFT City is envisioned as a key link between offshore capital and domestic opportunities.

Top Investment Options for NRIs

NRIs can explore a diverse range of investment opportunities within the GIFT City ecosystem.

Banking and Deposit Options for NRIs: Offshore Banking Units (OBUs) enable NRIs to open foreign currency accounts within Indian jurisdiction, providing enhanced safety, smooth fund repatriation, and attractive yields.
Investing in International Equities and Bonds: GIFT City offers access to global stocks and debt instruments through IFSC exchanges such as India INX and NSE IFSC, enabling portfolio diversification.

Alternative Investment Funds (AIFs) for NRIs: As of September 2024, more than 140 AIFs are operational within GIFT City, including leading names like HDFC, Mirae, and Kotak. These funds are gaining popularity among NRIs for offering exposure to private equity, real estate, and structured debt.

REITs and INVITs for NRI Investment: NRIs can invest in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INVITs) listed on IFSC exchanges, allowing them to gain exposure to property and infrastructure without the complexities of direct management.

Insurance: ULIPs (Unit-Linked Insurance Plans) and endowment plans issued from GIFT City are exempt from capital gains tax, provided the annual premium does not exceed 10% of the sum assured.

Tax Benefits: NRIs benefit from several tax incentives when investing through GIFT City:

•    Capital gains tax: Exempt for many IFSC-listed securities.
•    Interest income: Bonds listed before July 1, 2023, are taxed at just 4%, with a 9% rate thereafter.
•    Dividend income: Taxed at a flat 10%, which is lower than typical Indian rates.
•    No GST: Financial services within GIFT City are zero-rated, further lowering costs.
•    No withholding tax: Applies to derivative transactions and offshore investments.

The Path Ahead: The Future Looks Bright for GIFT City and NRI Investors

The outlook for GIFT City is promising, with expected enhancements in the investment landscape for NRIs. More liberalized remittance schemes will streamline fund transfers between resident and non-resident accounts. Dual listing of global stocks (both in India and abroad) will provide a wider range of investment options. Dedicated NRI portals and digital on boarding will simplify KYC and compliance processes. Additionally, the introduction of sovereign green bonds, ESG-focused AIFs, and digital asset regulation under the IFSC Authority will further broaden investment opportunities.