In This Article
What Are GIFT City Funds?
These funds are investment schemes established within the IFSC (International Financial Services Centre) at Gujarat International Finance Tec-City, commonly known as GIFT City. Under the IFSCA Fund Management Regulations, fund structures may include retail schemes, restricted schemes and venture capital schemes, among others. Retail schemes may invest in securities and other permitted assets in the IFSC, India or foreign jurisdictions. (IFSCA)
Regulatory Framework: IFSCA vs SEBI
The main regulatory difference is simple.
Funds established in IFSCA GIFT City are governed by the IFSCA (International Financial Services Centres Authority) under the IFSCA (Fund Management) Regulations, 2025, as subsequently amended. (IFSCA)
Indian
mutual funds, on the other hand, operate under the SEBI (Mutual Funds) Regulations, 2026 and related circulars. (SEBI)
Both frameworks contain investor-protection, disclosure and governance requirements, but they are designed for different financial-market environments.
GIFT City Funds vs Indian Mutual Funds: Key Differences
| Factor | GIFT City Funds | Indian Mutual Funds |
|---|---|---|
| Regulator | Regulated by IFSCA | Regulated by SEBI |
| Currency | May be denominated in permitted foreign currencies | Generally denominated in Indian rupees |
| Investor Access | Eligibility depends on the scheme; some structures have higher minimum investments | Generally accessible to retail investors, subject to scheme conditions and KYC |
| Investment Exposure | May invest across India and international markets, subject to the scheme mandate | Primarily domestic, with overseas exposure allowed within applicable regulatory limits |
| Currency Risk | May involve foreign-exchange risk | Usually limited for domestic portfolios, though overseas investments may introduce currency risk |
| Tax Treatment | Depends on fund structure, investor residency and applicable IFSC provisions | Depends on scheme category, holding period and prevailing Indian tax rules |
Taxation of GIFT City Funds vs Indian Mutual Funds
GIFT City taxation should not be viewed as one standard tax rate.
Domestic
mutual fund taxation depends on factors such as the nature of the scheme, holding period and applicable tax law. Tax treatment for a GIFT City investment may depend on the fund structure, underlying assets, the investor's residency and whether specific IFSC tax provisions apply.
Certain qualifying IFSC funds receive specific treatment under India's tax framework, but these provisions do not automatically apply in the same manner to every investor or every GIFT City scheme. The Income Tax framework contains separate provisions for eligible "specified funds" operating in an IFSC. (Income Tax Department)
Who Can Invest in GIFT City Funds?
Depending on the scheme and applicable foreign-exchange rules, potential investors may include non-residents, eligible resident Indians, institutional investors and accredited investors.
Resident individuals may access eligible international investments subject to applicable foreign-exchange rules, including the Liberalised Remittance Scheme (LRS), where relevant.
Eligibility should always be checked at the individual scheme level.
Benefits and Risks of Investing Through GIFT City
Potential benefits include access to international markets, foreign-currency investments and a wider range of investment strategies.
However, investors must also consider:
market and volatility risk- foreign-exchange risk
- overseas regulatory and geopolitical risks
- liquidity risk
- differences in taxation and reporting
- higher minimum investments for certain fund structures
GIFT City status itself does not make an investment low-risk or assure returns.
How to Invest in GIFT City Funds
The broad process may involve:
- Checking whether the investor is eligible for the chosen scheme
- Reviewing its offer document or placement memorandum
- Completing applicable KYC and regulatory documentation
- Meeting the scheme's minimum investment requirement
- Completing any foreign-exchange or LRS requirements that apply
- Investing through the channels permitted by the fund
GIFT City and India's Growing International Investment Ecosystem
GIFT City is steadily expanding its role as an international financial hub within India, supported by a regulatory framework designed for cross-border financial activity.
The scale of this expansion is visible in fund activity. As of June 2026, funds in the IFSC had raised more than $45 billion in cumulative commitments, indicating the ecosystem's growing fund-management presence. (IFSCA)
Blog Disclaimer:
The information herein is meant only for general reading purposes, and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data, and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision.
GIFT CITY disclaimer:
Investments in fund are subject to market risks, and currency exchange rate fluctuations. Please refer to the fund related documents carefully before investing. Past performance may or may not be sustained in future.