GIFT City explained: A new gateway to global stocks, mutual funds and insurance

GIFT City

• GIFT City enables easy access to global stocks and dollar mutual funds for Indians.
• Digital onboarding and tax-efficient structures simplify international investing
• GIFT City insurance products mainly target NRIs with USD-denominated offerings

Did our AI summary help?

GIFT City, India’s International Financial Services Centre, lets investors access global stocks, dollar-denominated mutual funds, and insurance. Digital onboarding, simple operations, and tax-efficient structures make GIFT City a convenient platform for building wealth while diversifying internationally.

GIFT City as gateway to global stocks

Indian investors can access global equities through GIFT City’s International Financial Services Centre (IFSC) exchanges (India INX and NSE IFSC), including Un-Sponsored Depository Receipts (UDRs) and broader exposure via regulated brokers under the International Financial Services Centres Authority (IFSCA).

These instruments provide access to US-listed stocks in a structurally compliant, foreign-currency framework without needing overseas brokerage accounts, enhancing operational and regulatory simplicity. When you invest through the GIFT City UDR route, your investment is limited to 50 US blue-chip stocks. Through Gift City NSC IFSC, one can also buy fractional shares.

“Direct overseas investing still allows a broader universe, but GIFT City’s onshore IFSC infrastructure reduces costs, provides STT and stamp duty exemptions, and offers tighter integration with India’s capital flows under RBI’s LRS,” says Vishal Goraddia, Fund Manager, Aikyam India Discovery Fund, Aikyam Capital Group.

Indian investors can access global equities through GIFT City in a few simple steps. First, they need to open an account with a broker regulated by IFSCA that operates on IFSC exchanges such as India INX or NSE IFSC. Next, they complete digital KYC and fund the account by remitting money under RBI’s Liberalized Remittance Scheme in the required foreign currency. Once funded, investors can buy unsponsored depository receipts linked to US-listed stocks.

Dollar-Denominated Mutual Funds via IFSC

GIFT City-based mutual funds, especially the new dollar-denominated passive FoFs (e.g., S&P 500 and Nasdaq 100 FoFs), operate under IFSCA with no SEBI overseas caps, using LRS remittances for direct exchange-traded fund (ETF) exposure. Structurally, they can avoid constraints that India-domiciled global schemes face due to investment limits and regulatory suspensions.

“IFSC funds benefit from streamlined cross-border regulation and often accumulate ETF strategies that aim for better compounding and tax efficiency. In contrast, India-based funds are subject to domestic fund caps and layered taxation, which can constrain diversification and return efficiency,” says Goraddia.

Indian investors can invest in GIFT City–based mutual funds by opening an account with an IFSCA-regulated fund platform, distributor, or IFSC banking unit that offers these schemes. Then the KYC process needs to be completed. The investment is then made into dollar-denominated passive fund-of-funds, such as S&P 500 or Nasdaq 100 FoFs, which directly invest in overseas ETFs. These funds operate under IFSCA, not SEBI, so they are not constrained by India’s overseas investment limits.

GIFT City Insurance Tailored for NRIs

Resident Indians generally cannot buy GIFT City insurance because these products are regulated under an offshore-style IFSC framework, sold in foreign currency, and designed mainly for NRIs.

“Insurance products offered through GIFT City are increasingly positioned to serve NRIs and globally mobile professionals with foreign-currency cash flows and cross-border estate or retirement needs, supported by a growing IFSC insurance ecosystem and recent expansion of licensed insurers and intermediaries,” says Goraddia.

IFSCA has an IIIO (Insurance Intermediary Offices) framework related to the insurance and reinsurance business. There are issuers approved and licensed by IFSCA in GIFT City. The major ones are HDFC Life International, ICICI Prudential, IndiaFirst, Star Union and others. The issuers have USD-denominated products predominantly for NRIs.

There are ULIP insurance-embedded wealth structures available for investors who are looking for insurance with investments. Pure protection term plans, endowment plans and dollar-denominated health insurance are also available.

“As mentioned, these are USD-denominated; hence, the currency fluctuation and USD appreciation can add to the corpus in the long run,” says Niteen Dongare, CEO & Head - GIFT City, IFSC, Anand Rathi International Ventures IFSC.

The ULIP structures also invest in global markets in dollars with several fund strategies like global equities, gold, and an AI strategy, which investors can select, and hence, this global diversification and investment in global markets can also benefit the investors. “Other benefits include that the repatriation of monies is easy for an NRI. The process of onboarding is digital with minimum documentation,” says Dongare.

The maturity proceeds are tax-free under section 10 (10 D) with no premium limit restrictions. For an NRI who is a tax resident of a country that has a DTAA with India and the policy is 10D compliant, there is a Nil TDS deduction on the maturity amount, and there is no need of a tax residency certificate (TRC) and Form 10. Thus, income on maturity will not be subject to taxes while filing ITR in India.