GIFT City: how NRIs can now invest in India in dollars

What GIFT City is

GIFT City — Gujarat International Finance Tec-City — is India's first International Financial Services Centre (IFSC), established as a special economic zone in 2015 near Ahmedabad. Its crucial feature is legal: although it sits on Indian soil, it is treated as "foreign territory" for the purposes of financial regulation and currency. Inside the IFSC, the working currency is not the rupee but the US dollar, pound or euro, and the rules that govern money there are built for global, not domestic, finance.

The dollar advantage

For an NRI, that changes the fundamental calculation. Money invested through GIFT City stays in foreign currency — dollars in, dollars out — which means no rupee conversion and no exchange-rate risk on the principal, and repatriation of profits and capital is free in foreign currency under the applicable rules. The old friction of moving money into and out of India largely disappears.

The tax breaks

The tax treatment is the other draw, and it is generous by design. Broadly, and subject to conditions: interest earned on foreign-currency deposits in the IFSC is tax-free in India; dividend income from IFSC units is taxed at a reduced rate; capital gains on securities listed within the IFSC attract lower rates than on the mainland; and income from many derivatives is exempt under a specific provision of the Income Tax Act. GIFT City funds are also exempt from the Securities Transaction Tax that applies elsewhere. The intent is unmistakable — to make investing in India through the IFSC cheaper, on tax, than doing it the old way.

What you can actually buy

The menu inside GIFT City has grown quickly. Foreign-currency deposits through IFSC banking units offer dollar, pound or euro fixed deposits, with tenors from days to a few years and interest that is tax-free in India. Mutual funds domiciled in the IFSC — often "feeder" funds that channel money into mainland Indian schemes — give Indian-market exposure with the IFSC's tax treatment. Alternative Investment Funds, aimed at wealthier investors, typically start at USD 150,000, though some accept less from accredited investors. Through an IFSC-registered broker, an NRI can even buy US and global stocks directly from a GIFT City account, in dollars, without routing money through a foreign brokerage. And under a Budget 2025 change, the proceeds of certain life-insurance policies issued from the IFSC are tax-exempt for non-residents.

Why it is growing now

Several recent moves have made GIFT City markedly more attractive. The government has extended the zone's tax holiday to 2030; from April 2026 mutual funds and ETFs can relocate into the IFSC without triggering capital-gains tax; and in June 2024 the markets regulator SEBI allowed funds domiciled at GIFT IFSC to be up to 100% NRI-owned, removing an earlier cap that had limited diaspora participation. Each change has pulled more NRI money in.

The catches

It is not frictionless for everyone. The single biggest caveat concerns US-based NRIs, who face complicated American tax rules on foreign investment funds — the "PFIC" regime — that can erode or erase the Indian tax advantage, regardless of how favourable India's own treatment is. The lesson is the one this guide always returns to: the benefit depends entirely on the interaction between India's rules and the rules of your country of residence, and that interaction is exactly what a qualified cross-border adviser exists to work out.

Why the series remembers it

The earlier parts of The NRI Money Guide dealt with the systems the diaspora has navigated for decades — the NRE and NRO accounts, the repatriation limits, the investment routes into Indian equities. GIFT City is the newest chapter, and a genuinely different one. It represents India's deliberate attempt to build an onshore-offshore financial hub that can pull diaspora capital home in dollars, on tax terms designed to compete with Singapore and Dubai. For the NRI, it is no longer only a question of how to move money into India, but whether, increasingly, the most efficient way to invest in India is to do it without the rupee at all.

The rivals it is built to beat

GIFT City is, in the end, a statement of national ambition. For decades, the offshore financial activity of Indians and India-focused funds flowed through Singapore, Dubai and Mauritius — jurisdictions that captured the fees, the jobs and the prestige of managing money bound for India. GIFT City is India's attempt to bring that business home, to build on its own soil a hub that can compete with Singapore's and Dubai's financial districts. Around the core it has assembled an ecosystem — a bullion exchange, aircraft-leasing companies, fintech firms and fund managers — all operating in dollars under a light-touch, globally-styled regime.

For whom it makes sense

For the NRI, the practical question is fit. GIFT City suits, above all, non-US NRIs — those in the Gulf, Singapore, the UK — who want dollar-denominated exposure to India without rupee risk and with clean repatriation, and who can meet the minimums, which range from modest deposits to six-figure fund commitments. Accounts can increasingly be opened remotely. But the recurring caution of this guide applies with full force: the tax outcome depends on the treaty and the rules of your country of residence, most sharply for Americans, and the only safe way to know whether GIFT City helps you specifically is to ask a cross-border adviser before you move a dollar.