GIFT City Funds Explained for NRI and Resident Investors

GIFT City funds are investment schemes set up inside the GIFT International Financial Services Centre (IFSC) at Gandhinagar, Gujarat, regulated by the International Financial Services Centres Authority (IFSCA) and usually denominated in US dollars. NRIs, foreign investors and, through the Liberalised Remittance Scheme (LRS), resident Indians can use them to invest in Indian or global assets from an offshore-style platform on Indian soil.

What GIFT City and IFSCA are

GIFT City stands for Gujarat International Finance Tec-City. It houses India's first operational IFSC, set up in 2015 as a zone treated as foreign territory for exchange-control purposes while staying under Indian oversight.

IFSCA is the unified regulator for securities, banking, insurance and pensions in the zone, so a GIFT City fund answers to IFSCA rather than SEBI. The current rulebook is the IFSCA (Fund Management) Regulations, 2025, under which a registered Fund Management Entity (FME) can run retail schemes, restricted (non-retail) schemes and portfolio management services.

Types of IFSC funds: AIF categories, retail, restricted and feeder

IFSC funds use the same three categories as domestic AIFs, plus GIFT City-specific labels:

• Category I AIF: start-ups, social ventures, SMEs, infrastructure and other sectors treated as economically desirable.
• Category II AIF: private equity, private credit, real estate and fund-of-funds strategies, without external leverage.
• Category III AIF: diverse or complex trading strategies, including long-only, long-short, arbitrage and hedged portfolios, with derivatives and disclosed leverage within limits.
• Retail schemes: open to a wider investor base at lower minimums, with more prescribed limits.
• Restricted (non-retail) schemes: for eligible investors above set thresholds, with more flexibility and often lower liquidity. Category II and III AIFs are the usual examples.
• Feeder funds: a GIFT City vehicle that channels money into a larger master fund in India or abroad, with expenses at both levels.
• Inbound and outbound funds: inbound funds pool foreign and NRI money for Indian assets; outbound funds take Indian, NRI and global money overseas.

A public directory of 229 GIFT City funds, captured on 10 October 2026, shows the split:

Who can invest in GIFT City funds

IFSCA sets no minimum Indian-connection requirement. NRIs, OCIs, PIOs, overseas trusts and companies, foreign portfolio investors, family offices and institutions are eligible; parties on sanctions lists are excluded.

Not every fund is open to every NRI: eligibility also depends on your country of residence, FATCA and CRS declarations, source of funds and the scheme's own rules, and your home country may tax the gains, with credit under India's DTAA treaties.

NRI investment in GIFT City: currency and repatriation

Most IFSC funds are USD-denominated; some operate in GBP, EUR or AED. You subscribe in foreign currency straight into the fund's IFSC bank account, with no INR conversion and, for many funds, no NRE or NRO account.

Proceeds return in the currency you contributed, with no USD 1 million annual cap and no Form 15CA or 15CB, both of which apply to the NRO route under FEMA. A dollar NAV does not remove currency risk: if a fund holds Indian shares, a weaker rupee cuts the dollar return.

LRS GIFT City route for resident Indians

Under the RBI's LRS, a resident individual can remit up to USD 250,000 per financial year, which resident investors use to buy dollar-denominated AIFs or PMS at GIFT City. Some IFSC schemes exclude resident Indian investors, so read the placement memorandum before you remit. And a resident's return is finally measured in rupees, so a stronger rupee shrinks the gain.

A resident in a GIFT City PMS is taxed as if the investment were made directly, with capital gains at the applicable rates and dividends in your hands; confirm your position with a chartered accountant. If your income and spending are entirely in rupees, a domestic PMS, SIF or mutual fund may do the job with less complexity.

Minimum investment in GIFT City funds

There is no single minimum. USD 150,000 is the IFSCA floor for restricted schemes and the figure most listed funds show: 17 of the 19 directory funds that state a minimum display it. Accredited investors are exempt from that floor and retail schemes carry lower entry points. The USD 75,000 that some sites quote for GIFT City AIFs is the February 2025 minimum for a GIFT City PMS client, so check each scheme's placement memorandum.

How GIFT City funds are taxed, in brief

Category I and II AIFs at IFSC are pass-through vehicles: income other than business income is taxed in your hands, and treaty benefits apply. Category III AIFs are taxed at fund level, so you are generally not taxed again in India on redemption. The specified-fund exemption, Section 10(4D) of the Income-tax Act, 1961 until 31 March 2026 and now Schedule VI of the Income-tax Act, 2025, covers specified income of qualifying IFSC funds held by non-residents, who also see a 10 per cent rate on Indian dividends and interest and no STT, CTT or stamp duty on IFSC exchange transactions. These are the rules for financial year 2026-27; check your outcome with a chartered accountant.

Process and documents for GIFT City investment

1. Shortlist a fund by strategy, minimum, liquidity, fees and currency, and confirm you are eligible.
2. Complete KYC: passport, overseas address proof, NRI or OCI status, PAN where applicable, tax residency details, source-of-wealth documents and FATCA or CRS declarations, plus a Tax Residency Certificate and Form 10F for a DTAA claim.
3. Read the Private Placement Memorandum, then sign the application and subscription documents.
4. Pass the fund administrator's AML review and transfer money in the permitted foreign currency.
5. Receive your unit allotment and periodic reports.

KYC is accepted in English and physical presence is not required. Assets sit with an IFSC-licensed custodian, NAV is disclosed quarterly and accounts are audited yearly.

Risks to weigh before you invest

A GIFT City wrapper does not remove market, credit, liquidity, currency, manager, regulatory or tax risk. Many IFSC AIFs have lock-ins of three to seven years or longer, and an open-ended label does not mean daily liquidity. Performance fees above a hurdle and double expenses in feeder structures can leave net returns materially below gross figures.

Sanriya Finvest Pvt. Ltd., Pune, an AMFI-registered mutual fund distributor (ARN-193359) and APMI-registered PMS distributor (APRN01056), helps you compare GIFT City fund options, check eligibility and complete the paperwork as a distributor. See our GIFT City funds page or contact us.

Frequently asked questions

Can resident Indians invest in GIFT City funds under LRS? Yes, where the scheme permits it. The RBI's LRS lets a resident individual remit up to USD 250,000 in financial year 2026-27, which can go into a dollar-denominated AIF or PMS at GIFT City. Some IFSC schemes exclude residents, so read the placement memorandum.

Do NRIs need an NRE or NRO account for GIFT City investment? Usually not. Many GIFT City funds take subscriptions in foreign currency directly into the fund's IFSC bank account and return proceeds in the same currency, with no USD 1 million annual cap and no Form 15CA or 15CB. Confirm the route in the fund's documents.

Are returns from GIFT City funds tax-free for NRIs? Not automatically. Category I and II AIFs are pass-through vehicles, Category III AIFs are taxed at fund level, and the IFSC specified-fund exemption (Schedule VI of the Income-tax Act, 2025, formerly Section 10(4D)) covers qualifying funds held by non-residents, who pay 10 per cent on Indian dividends and interest. Confirm your outcome with a chartered accountant.