Rich investors tap GIFT City route as LRS limits pinch, says Julius Baer’s Umang Papneja

Julius Baer’s Umang Papneja

India’s wealthy are increasingly turning to GIFT City to channel global investments as traditional overseas routes hit regulatory ceilings and practical limits.

“Around half a billion dollars has already gone into international investing through GIFT City,” said Umang Papneja, CEO, Julius Baer India, speaking at The Wealth Formula's Diwali special roundtable on private wealth. “This is only the beginning. The systems are now getting in place — people know which bankers and AD banks to approach — and that awareness is translating into flows,” he said.

Papneja noted that most Indians have so far invested abroad through feeder funds or under the Liberalised Remittance Scheme (LRS).

“The USD 7-billion feeder-fund limit is almost exhausted, so only a few funds are open for fresh purchases,” he said. “And with LRS capped at USD 250,000 a year, investors who also use it for education or travel are left with very little room for portfolios. GIFT City changes that — it allows up to 50 percent of net worth to be invested if structured through a corporate or LLP.”

That flexibility, he said, is pulling early interest from ultra-rich families and promoter entities seeking global exposure without setting up vehicles in Singapore or Dubai.

“Suddenly, you’re talking about a much larger market because a few corporates or LLPs can have significant net worth and go way beyond the USD 250,000 limit.”

Yatin Shah, Co-founder of 360 ONE and CEO of 360 ONE Wealth, said the shift is part of a broader portfolio rebalancing.

“Ultra-HNIs always have a diversification strategy,” he said. “Some of the flows that earlier went overseas through direct routes are now being channelled via GIFT City structures. We’re seeing steady traction there.”

Ashish Gumaste, CEO of Gumaste Partners, said GIFT City is giving Indian promoters a legitimate route to internationalise wealth.

“A lot of capital is flowing abroad through GIFT now,” he said. “Unlike in the past, when money went overseas for the wrong reasons, today it’s going for the right ones — to expand, diversify and grow.”

Rajesh Saluja, CEO and MD of ASK Private Wealth, added that investors are using the route to complement, not replace, domestic holdings.

“Some money will always get reallocated into international markets, gold or real estate,” he said. “But it’s not that people are staying away from Indian equities. They’re just using GIFT City as part of a balanced asset-allocation framework.”

For wealth managers, GIFT City’s expanding ecosystem — through Fund Management Entities (FMEs), Foreign Investment Funds (FIFs) and Category III AIFs — is emerging as a tax-efficient bridge for global investing on Indian soil.

Summing it up, Papneja identifies that we’re at a very early stage, but this is where the real traction is coming from. As awareness spreads and systems mature, the GIFT route will see exponential growth.