Accreditation unlocks GIFT City AIFs for Indian investors

Allows HNIs, family offices to access offshore investment strategies with lower entry barriers

- Neil Borate & Anil Poste

Accreditation is quietly reshaping access to global investing for Indians and NRIs via GIFT City. India's offshore finance hub now hosts 229 alternative and venture capital (VC) funds, according to the International Financial Services Centres Authority's January-March bulletin. Most are inbound funds, managing $5.7 billion in assets from NRIs as well as foreign investors. Outbound funds—meant for Indians investing overseas—manage $842 million. Both types typically require a minimum investment of $150,000. But accredited investors can start with as little as $10,000, making global diversification and tax-efficient structures more accessible.

Why invest via GIFT City? NRIs investing in India via GIFT City benefit from easier paperwork and tax advantages, as there need not open a non-resident external (NRE), non-resident ordinary (NRO), portfolio investment scheme (PIS) or non-PIS account.

GIFT houses India's first International Financial Services Centre (IFSC) that is considered to be outside India from the point of view of the Foreign Exchange Management Act (FEMA) of 1999, allowing funds to be held in US dollars. NRIs are also not taxed in India on investments routed via the offshore finance zone. Indian residents can only use outbound AIFs in GIFT City with some benefits. Since GIFT City is treated as part of India for income tax purposes, it avoids the Black Money Act and the stricter disclosure rules for foreign assets.