GIFT City: India's Offshore Financial Hub and Why NRIs Should Take Notice

What Is GIFT City?

Gujarat International Finance Tec-City – better known as GIFT City – is India’s first operational greenfield smart city and its first International Financial Services Centre (IFSC). Located between Ahmedabad and Gandhinagar in Gujarat, it was conceived as India’s answer to Singapore, Dubai’s DIFC, and Hong Kong: a globally competitive financial hub on Indian soil, but governed by a distinct, offshore-friendly regulatory framework.

Since 2015, the Reserve Bank of India has classified the IFSC within GIFT City as a “non-resident” area under the Foreign Exchange Management Act (FEMA). This single designation is the cornerstone of everything that makes GIFT City special: it allows transactions in foreign currency, removes the mandatory rupee-conversion burden, and opens the door to a suite of benefits that simply do not exist elsewhere in India.

The city is governed by the International Financial Services Centres Authority (IFSCA), a unified regulator that consolidates the powers of RBI, SEBI, IRDAI, and PFRDA under one roof. This streamlined governance model has been a game-changer for attracting global institutions.

Why GIFT City Is a Compelling Opportunity for NRIs

For decades, NRIs have grappled with a familiar set of frustrations: currency conversion losses on NRE/NRO accounts, cumbersome repatriation paperwork, high TDS deductions, FEMA compliance overhead, and restrictions on global investment access. GIFT City was designed to solve exactly these problems.

Investment Opportunities at GIFT City

Foreign Currency Fixed Deposits (USD FDs)

The most accessible entry point for NRIs. Banks operating within GIFT City’s IFSC offer USD-denominated fixed deposits with interest rates currently ranging between 4.5% and 6% per annum — competitive with and often superior to equivalent products in the US or UK. Tenure options start from as short as 7 days, compared to the minimum 1-year lock-in on traditional FCNR deposits. Minimum deposit amounts are as low as USD 500, making them accessible to a wide range of investors. Crucially, interest earned on these deposits is completely tax-free in India.

Alternative Investment Funds (AIFs)

GIFT City hosts over 300 AIFs as of early 2026, with total AUM of over USD 35 billion. AIFs pool capital to invest across private equity, real estate, infrastructure, structured debt, and global equities. There are two broad categories: inbound funds that invest in Indian equities, and outbound funds that provide exposure to global markets.

GIFT City Mutual Funds

Asset Management Companies (AMCs) have launched offshore mutual funds domiciled within GIFT City. These funds are denominated in multiple currencies — USD, GBP, SGD, AED — eliminating the currency conversion hassle that plagues rupee-denominated mainland funds. Importantly, these funds accept investors from the US and Canada — nationalities that are commonly restricted from investing in regular Indian mutual funds due to FATCA/CRS compliance requirements.

Global Equities and Exchange-Traded Products

Through GIFT City’s two international exchanges — NSE IFSC (NSE IX) and India INX (a BSE subsidiary) — NRIs can trade not only Indian market instruments, but also global equities and funds. This direct access to international stocks through a single, India-regulated platform eliminates the need for separate overseas brokerage accounts while remaining fully FEMA-compliant.

Portfolio Management Services (PMS)

For NRIs who prefer personalised, discretionary management, GIFT City-based PMS provides exposure to equities, fixed income, money markets, and other asset classes — managed by professional fund managers. Investments in notified securities through PMS routes at GIFT City may be eligible for capital gains tax exemptions.

REITs and InvITs

Real Estate Investment Trusts and Infrastructure Investment Trusts listed on IFSC exchanges provide regulated, low-cost access to real estate and infrastructure assets without the complications of direct property ownership.

Offshore Banking and Global Savings Accounts

GIFT City banks offer global savings accounts in multiple foreign currencies, available as single or joint accounts with nomination facilities. These accounts do not require a pre-existing NRE or NRO account. NRIs can open them directly, funded via overseas wire transfers.

Tax Benefits: The Core Attraction

The tax architecture at GIFT City is arguably the most powerful argument for NRI investment.

Zero Capital Gains Tax on Specified Securities

Capital gains from transactions in specified listed assets — ETFs, mutual funds, and trusts operating under IFSCA Fund Management Regulations 2022 — are entirely exempt from Indian capital gains tax for non-residents. Category III AIFs investing in derivatives and specified securities on IFSC exchanges attract zero capital gains tax at both the fund and investor level.

100% Exemption on Derivatives Income

Under Finance Bill 2025, Section 10(4E) of the Income Tax Act was expanded to provide complete income tax exemption on profits from Over-the-Counter (OTC) derivatives, non-deliverable forward contracts, and offshore derivative instruments.

Tax-Free Interest on Foreign Currency Deposits

Interest earned on foreign currency deposits held with IFSC Banking Units is fully exempt from Indian income tax. TDS obligations exist only in the investor’s country of residence, not in India.

Concessional Tax on Dividend Income

Dividend income from GIFT City investments is taxed at a maximum of 10% — compared to 20–30% TDS applicable to dividends from mainland Indian investments.

Concessional Tax on Bonds

Interest on rupee-denominated bonds listed on IFSC exchanges is taxed at a flat 9% for NRIs (with no surcharge or cess), significantly lower than the 30% TDS applicable to NRO account interest.

Zero Transaction Taxes

Within IFSC exchanges, all transactions are exempt from Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), stamp duty, and GST. Services provided to non-residents are entirely GST-free.

No Mandatory Tax Return Filing for AIF Investors

NRIs investing solely through Category I or II AIFs in GIFT City can, in certain cases, avoid individual Indian tax return filing and PAN card requirements.

Beyond Taxes: Additional Benefits for NRIs

No Currency Conversion Risk

GIFT City investments remain denominated in foreign currencies throughout. Unlike NRE fixed deposits — where foreign earnings are converted to rupees at deposit and converted back at redemption — GIFT City investments are never exposed to rupee depreciation risk. Over the past decade, the rupee has depreciated approximately 3–4% annually against the dollar. On a 7% NRE FD, that leaves a real USD return closer to 3–4%. GIFT City eliminates this hidden erosion entirely.

Frictionless Repatriation

Getting money back out of India has historically been the pain point NRIs dread most. NRO accounts cap repatriation at USD 1 million per year and require Form 15CA, Form 15CB, CA certificates, and extended RBI compliance procedures. GIFT City investments, being legally classified as offshore, carry no repatriation caps and no documentation overhead.

Access Without NRE/NRO Accounts

GIFT City investments can be made directly from an overseas bank account via SWIFT transfer. There is no requirement to first route money through an Indian NRE or NRO account.

15+ Currency Options

Transactions can be conducted in over 15 currencies, providing flexibility for NRIs based across different geographies — UAE, US, UK, Singapore, Australia, and beyond.

Video KYC from Anywhere

Remote video KYC is implemented for NRI onboardings. The entire onboarding process — including document verification and liveness checks — can be completed digitally in 15–30 minutes, without requiring a visit to India.

GIFT City vs. Traditional NRI Investment Routes

Understanding GIFT City’s advantages is clearer in the context of the alternatives available to NRIs.

Who Should Consider GIFT City?

GIFT City is not a one-size-fits-all solution. It is most suitable for:

High-net-worth NRIs with USD 150,000+ who want institutional-grade investment structures (MFs, AIFs, PMS) with maximum tax efficiency.
UAE-based NRIs, for whom India-UAE DTAA combined with GIFT City’s zero-tax framework in India can bring the effective tax rate on investments close to zero.
US and Canada-based NRIs who are shut out of regular Indian mutual funds due to FATCA/FBAR constraints; GIFT City funds welcome them.
NRIs focused on repatriation who want to build a foreign-currency corpus they can access freely without RBI paperwork.
Conservative investors seeking USD FDs that beat home-country deposit rates while keeping capital tax-free.
NRIs planning a return to India, who want to maximise tax-free accumulation while still resident abroad.

Things to Keep in Mind

Tax obligations in the country of residence still apply. GIFT City investments are tax-free in India — but they may be taxable in your country of residence (UK, US, Australia, etc.). UAE-based NRIs benefit the most, since the UAE has no personal income tax.

DTAA planning is important. Obtaining a Tax Residency Certificate (TRC) from your country of residence is essential to claim treaty benefits and avoid double taxation on any Indian-source income.

Conclusion

GIFT City is India’s most ambitious financial experiment, and one that is working. For NRIs, it represents something genuinely new: a platform that is legally offshore (so transactions stay in foreign currency), regulated onshore (so it carries Indian institutional credibility), and structurally designed to minimise tax friction, maximise repatriation flexibility, and offer access to a breadth of global financial instruments that India’s domestic markets simply cannot match.

For years, the standard advice for NRIs was to open an NRE account, park savings in a fixed deposit, and review occasionally. That advice is now incomplete. GIFT City deserves a serious place in every NRI’s investment planning conversation.

As India continues its rise to the world’s third-largest economy, GIFT City is positioned to be the financial gateway through which the global Indian community participates in and benefits from that journey.

Disclaimer: All the above views are for educational purposes and are not given as investment advice.