In the evolving architecture of international finance, India’s Gujarat International Finance Tec-City, or GIFT City, is rapidly transforming from an ambitious concept into a credible financial hub. As the country’s first operational International Financial Services Centre, it is beginning to rival established global players such as Singapore, Dubai, and Hong Kong by combining international regulatory standards, tax competitiveness, and direct access to one of the world’s fastest-growing economies. The vision is clear: to make GIFT City India’s offshore-onshore bridge for global capital, where investors can participate in Indian markets with the same transparency and legal certainty that define mature jurisdictions.
Strong Growth and Progressive Regulation
The scale of growth is remarkable. As of June 2025, GIFT IFSC housed 177 Fund Management Entities managing 272 schemes with total commitments of 22.11 billion US dollars, reflecting a rise of more than 40 percent over the previous quarter. Category III Alternative Investment Funds, which are central to this expansion, accounted for 10.15 billion US dollars, nearly triple the previous year’s figure. Total assets under management now stand at about 23.5 billion US dollars and are projected to grow at a compound annual rate of 35 percent, crossing 100 billion US dollars by 2030.
This progress reflects the proactive stance of the International Financial Services Centres Authority. The Fund Management Regulations 2025 simplified third-party management, strengthened investor-protection norms, and created a framework that is more agile than comparable regimes elsewhere. New policy developments, including the Global Access Circular issued in August 2025 that allows SEBI-registered brokers to operate through GIFT-based entities, and the foreign-currency settlement system announced in October 2025, have deepened the city’s market infrastructure and connectivity.
A Competitive Advantage in Cost and Compliance
GIFT City enjoys a unique advantage as it is integrated into India’s four-trillion-dollar economy and supported by a deep talent pool. Its structure offers global standards at a lower cost. Singapore’s 17 percent corporate tax and high real-estate costs limit profitability, while Dubai’s zero-tax regime involves higher operational expenses and a time-zone gap from Asian markets. GIFT City provides a 100 percent income-tax exemption for ten years out of fifteen, zero GST on intra-IFSC services, and exemptions from Securities and Commodities Transaction Taxes. These measures can reduce operational costs by 30 to 50 percent compared with other financial hubs. Compliance frameworks align with global norms such as FATCA and the Common Reporting Standard, and the legal system is based on English common law. Together, these features create an ecosystem that meets international benchmarks while remaining efficient and accessible.
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Category III AIFs at the Core
Category III Alternative Investment Funds form the foundation of GIFT City’s success. They enable fund managers to pursue complex investment strategies under a transparent and regulated structure. Compared with domestic SEBI-regulated funds, where tax incidence can exceed 40 percent, IFSC-based funds are taxed at the fund level and offer exemptions for non-resident investors. Income from offshore securities and IFSC-listed instruments is tax-free, transfers of fund units incur no capital-gains tax, and non-residents need not obtain a Permanent Account Number or file Indian tax returns. This simplifies participation for foreign investors, family offices, and NRIs while opening direct access to India’s equities, debt instruments, and derivatives through India INX and NSE IFSC exchanges.
This shift is already visible on the ground. Several asset managers, including DSP Asset Managers, have launched global equity funds through GIFT City this year, signaling growing investor confidence in its regulatory stability and tax clarity.
An Expanding Financial Ecosystem Ahead
GIFT City’s evolution is evident beyond fund management. High-frequency trading firms have relocated operations to benefit from lower transaction costs, and India’s first GIFT City IPO is nearing completion. More than 400 financial entities now operate from the IFSC, covering fund management, insurance, fintech, and banking. The government has extended tax incentives, simplified onboarding through Invest India’s single-window portal, and initiated bilateral recognition dialogues with Singapore, Dubai, and the United Kingdom. GIFT City rose to 43rd position in the Global Financial Centres Index in 2025, reflecting its rising international credibility. These reforms are not only attracting capital but also ensuring that global wealth is routed through Indian soil rather than offshore centres.
Infrastructure gaps and enforcement challenges that once deterred global players are steadily closing. With new settlement systems, regulatory sandboxes for fintech, and expanded access for global participants, GIFT City is positioned to become the gateway through which diversification of global capital and Indian investments can truly flow. For forward-looking fund managers, it represents far more than a tax-efficient jurisdiction. It stands as the foundation of India’s financial globalisation, a place where international capital meets Indian enterprise under one regulatory roof. Those who recognise this opportunity early will not only benefit from India’s rise but also help shape the next chapter of global finance, one that is now being written in India.
About the Author
Nilesh Choudhary, is a visionary entrepreneur with nearly two decades of extensive expertise in investment banking and fund management, founded Aikyam Capital to simplify access to India’s Capital Markets. Backed by a team of seasoned financial experts, he has built Aikyam into a multifaceted firm offering broking. Investment banking, fund management, and capital market solutions for global and domestic investors. A Chartered Accountant with an MBA from NMIMS, he has expertise in international finance, compliance, asset management, and business operations.
