GIFT City draws big players with business sops

Banks, PEs, hedge funds registering with IFSCA

- RAJESH BHAYANI & ASHLEY COUTINHO

The funds ecosystem in India's maiden International Financial Services Centre (IFSC) in GIFT City is gaining significant momentum with more than 20 Alternative Investment Funds (AIFs) now registered with the IFSCA, the unified regulator for IFSCs in India.

These feature leading names in the venture funds, private equity and hedge funds ecosystem and include commitments to raising $4.6 billion from global investors, according to people in the know. Additionally, 25 fund managers, 6-7 portfolio management services and 4-5 investment advisors have registered with the IFSCA. Another 25-30 players are in the advanced stages of applying to it for fund services.

Total banking transactions at IFSC are estimated to have crossed $140 billion and NDF transactions to have crossed $170 billion. Twenty foreign and Indian banks are now part of the IFSC ecosystem.

GIFT IFSC is emerging as a preferred destination for India-centric Funds, said Tapan Ray, MD & Group CEO, GIFT City.

While Category I and Category II Funds enjoy pass through status from a tax perspective, the government has introduced a special tax regime for Category III AIFs at par with other leading jurisdictions.

Further, investors in AIFs in GIFT IFSC are not required to obtain a Permanent Account Number of India (PAN), which provides ease of doing business for foreign investors.

“AIFs in GIFT IFSC are permitted to take leverage without any restrictions and diversification norms do not apply for investment in India. In addition to the regulatory and tax incentives, Funds located in GIFT IFSC enjoy lower cost of operations,” said Ray.