GIFT City: The Smartest Way for NRIs to Invest in India in 2026

Hi,

A friend of mine in Dubai called me last month. He'd put $100,000 into Indian equities back in 2015. On paper, the Sensex nearly tripled. His actual dollar returns? Barely doubled. The rupee had quietly eaten away ~40% of his gains, sliding from ₹63 to around ₹86 against the dollar.

"I feel like I'm running on a treadmill," he said. "The market goes up, the rupee goes down, and I'm roughly where I started."

Sound familiar? If you're an NRI in the UAE, UK, Singapore, or anywhere in Europe, this is probably one of your biggest frustrations with NRI investment in India. You want to participate in India's growth story (and you should, frankly), but the mechanics of actually doing it have always been... painful.

Well, that's changing. Fast.

Let's begin.

What is GIFT City and Why Should NRIs Care?

Gujarat International Finance Tec-City (GIFT City) sits between Ahmedabad and Gandhinagar. But calling it a "city" undersells what it actually is. It's India's first operational International Financial Services Centre (IFSC), and legally, it functions as a foreign territory on Indian soil.

That last bit is important. Let me repeat it.

GIFT City IFSC is treated as a "non-resident" jurisdiction under FEMA. This means transactions between you (an NRI) and a GIFT City entity are considered non-resident-to-non-resident. No mandatory rupee conversion. No NRE/NRO headaches. Your dollars stay as dollars.

Think of it as taking the regulatory ease and tax benefits of Singapore or Dubai, and placing them physically in Gujarat with direct access to Indian markets. That's the pitch, and honestly, the numbers are starting to back it up.

As of mid-2025, GIFT City hosts 32 banks, over 337 capital market intermediaries, 47 insurance and reinsurance firms, and more than 272 Alternative Investment Funds (AIFs). The monthly trading turnover across its exchanges has crossed $100 billion. Total banking assets? Over $94 billion. This is no longer an experiment.

NRI Mutual Funds: GIFT City Changes the Game

Now, if you've tried investing in NRI mutual funds through the traditional route, you know the drill. Open an NRE or NRO account, convert your currency, deal with TDS on redemptions, pray the rupee doesn't tank while you're invested, and then struggle with Form 15CA/CB when you want your money back.

GIFT City flips this entirely.

Asset management companies (AMCs) operating inside the IFSC have launched mutual funds denominated in foreign currencies (USD, GBP, EUR, SGD, AED). These are feeder funds that invest in corresponding mainland India schemes, so you still get Indian equity exposure. But here's the difference: your investment, your returns, and your redemption all happen in your home currency.

Observations:

• Tata Asset Management launched their Dynamic Equity Fund at GIFT City in September 2025 with a minimum of just $500
• Several AMCs now offer NRI mutual funds starting at $500, making this accessible well beyond the HNI crowd
• SEBI's June 2024 amendment allows NRIs and OCIs to contribute up to 100% of the corpus in funds seeking FPI registration at GIFT IFSC (the old limit was 50%)
• From April 2026, mutual funds and ETFs can relocate to GIFT City from offshore jurisdictions like Mauritius or Singapore without incurring capital gains tax

That last point is quite significant. It means the universe of fund options available through GIFT City is about to expand considerably, as offshore funds find it attractive to shift their base onshore.

For NRIs in the UK or Europe who are used to investing through Dublin or Luxembourg domiciled funds, this is a familiar structure. The difference is you're getting India-focused exposure through a regulated, tax-efficient Indian jurisdiction rather than routing through a third country.

The IFSC is governed by one unified regulator, the International Financial Services Centres Authority (IFSCA), which holds the combined powers of RBI, SEBI, IRDAI, and PFRDA. One regulator, one window. That's a big deal.

Beyond Mutual Funds: The Full Investment Menu

NRI mutual funds are arguably the easiest entry point, but GIFT City offers a much broader buffet. Here's the full picture:

Alternative Investment Funds (AIFs)

AIFs in GIFT City give you exposure to private equity, venture capital, real estate, infrastructure, and structured debt. The minimum investment dropped from $150,000 to $75,000 in February 2025, with typical three-year lock-ins.

Now here's where it gets interesting for UAE-based NRIs specifically. Category III AIFs that invest in Indian equity mutual funds are fully exempt from capital gains tax in India, and they're only taxable in the investor's country of residence. If you're in a zero-tax jurisdiction like the UAE... well, you can do the maths.

Global Savings Accounts and Fixed Deposits

IFSC Banking Units (IBUs) from ICICI, HDFC, Axis, SBI, and Kotak offer global savings accounts in USD, GBP, EUR, CAD, AED, SGD, and more. Fixed deposits are available from 7 days to 39 months, with interest rates between 2.5% and 6% depending on currency and tenure.

The kicker? Interest earned on these deposits is completely tax-free in India. For UAE NRIs, that's a genuinely tax-free return. For UK or Singapore NRIs, you'd need to check your local tax treatment, but the India-side exemption still helps.

Global Equities and Derivatives

Through NSE IFSC and India INX, you can trade global equities (Apple, Tesla, Amazon) and Indian derivatives without Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), or stamp duty. The exchanges operate for ~21 hours a day, covering Asian, European, and US market timings.

So yes, you could theoretically buy Nifty futures and Apple stock from the same platform, in dollars, from your flat in London. Pretty neat.

NRI Tax Planning and ITR Filing: The GIFT City Advantage

Tax is where GIFT City arguably shines the brightest for NRIs. Let me lay it out:

What's exempt inside GIFT City IFSC:

• No Securities Transaction Tax (STT)
• No Commodity Transaction Tax (CTT)
• No stamp duty on transactions
• Capital gains tax exempted on specified securities (units of ETFs, schemes, and trusts under IFSCA Fund Management Regulations, 2022)
• Interest income from foreign currency deposits is tax-free
• Income from derivatives (non-deliverable forwards, OTC derivatives with banking units) is exempt
• Life insurance proceeds from IFSC offices became tax-exempt from April 2025
• Concessional TDS rates on dividend income from GIFT City investments

The tax holiday: Businesses operating within GIFT IFSC enjoy 100% income tax exemption for any 10 consecutive years within a 15-year window. Budget 2025 extended the deadline to commence operations to March 2030, providing five-year policy certainty.

Now, NRI tax planning and ITR filing gets complicated because you're dealing with two tax jurisdictions (at minimum). Here's where GIFT City simplifies things:

Since GIFT City is treated as a foreign jurisdiction under FEMA, your investments are structured as "offshore" from India's perspective. If you're in the UAE, your returns from Category III AIFs or retail schemes are exempt from tax on income from specified securities in India, and there's no capital gains tax in the UAE either. That's a genuine double exemption.

For NRIs in the UK, Singapore, or Europe, the treatment depends on your specific country's DTAA with India. But the starting position is still better than investing through the regular Indian route, because many of the Indian taxes (STT, CTT, stamp duty) simply don't apply.

NRI Insurance Solutions: Dollar-Denominated Protection

Here's something most NRIs don't think about enough. You buy a ₹1Cr term insurance policy in India. Sounds like solid coverage. But if you're living in London or Dubai, that ₹1Cr is worth roughly $115,000 today. In 15 years, with rupee depreciation, it could be worth $80,000 or less. Your family's protection erodes silently every year.

GIFT City fixes this with NRI insurance solutions denominated in foreign currency.

Leading insurers like HDFC International Life, Axis Max Life, and others have set up shop in GIFT City offering:

• USD/Foreign Currency ULIPs: Life insurance plus investment in global equity and debt funds, all in dollars
• Term and Whole-Life Plans: Premiums paid in dollars, claim settlement in dollars
• Retirement and Savings Plans: Long-term USD plans with flexible premiums and access to global funds
• International Private Medical Insurance (IPMI): Global medical coverage tailored for NRIs and expatriates

The insurance products are regulated by IFSCA and serviced entirely in foreign currency. From April 2025, life insurance proceeds from IFSC offices are also tax-exempt, which is a meaningful addition.

For NRIs in the UAE or Singapore who already have local insurance, GIFT City's dollar-denominated policies can complement your existing coverage while giving you India-linked protection without the currency risk.

[INTERNAL LINK: nri-insurance-guide]

FEMA Compliance Advisory: What You Need to Know

Alright, let's talk about the elephant in the room. FEMA compliance advisory is where most NRIs trip up, and for good reason. The rules are complex, they change periodically, and the penalties for non-compliance aren't trivial.

Here's the thing though: GIFT City actually simplifies FEMA compliance considerably.

Why GIFT City is FEMA-friendly:

Since IFSC at GIFT City is classified as a non-resident jurisdiction under FEMA, transactions between NRIs and GIFT City entities are treated as non-resident-to-non-resident. This means:

1. You don't need Form 15CA/CB for repatriating funds from GIFT City (unlike NRO account repatriation where you need a CA certificate)
2. Funds are fully repatriable without the $1 million annual cap that applies to NRO accounts
3. No mandatory conversion to INR, so you avoid the entire forex conversion compliance layer
4. You can invest directly using your overseas bank account or FCNR/NRE account

The traditional NRI investment route (for comparison):

• Open NRE/NRO account (must inform bank of NRI status, convert old savings accounts)
• Investments through PIS (Portfolio Investment Scheme) for direct equity, with single-bank restrictions
• Repatriation from NRO capped at $1 million per financial year, requiring Form 15CA/15CB and CA certificate
• Must follow sector-specific FEMA caps for direct investment in Indian companies
• PPF, small savings schemes are restricted

Some FEMA rules that still apply regardless of GIFT City:

• NRIs cannot buy agricultural land, plantations, or farmhouses in India
• You must convert your resident savings account to NRO once you become an NRI (a surprisingly common FEMA violation)
• Gifts between NRIs and residents must go through authorised banking channels
• All PIO cardholders must convert to OCI by December 31, 2025

"Getting money into India is easy; getting it out is a nightmare." That's the line I hear most from NRI friends. GIFT City, by design, eliminates this friction. Capital flows as easily as it would between London and New York.

A quick note for 2026: RBI is actively encouraging rupee internationalisation, and video KYC is now available for NRE and NRO account opening. IFSCA has also implemented video KYC for NRIs investing in GIFT City, so you can complete the entire process remotely without visiting India.

How to Actually Get Started: A Step-by-Step Approach

Enough theory. Here's what you actually need to do:

Step 1: Confirm Your Residential Status

Under FEMA, you're an NRI if you hold an Indian passport and stayed outside India for more than 182 days in the financial year. (If your Indian income exceeds ₹15L, the threshold drops to 120 days, but for most NRIs earning abroad, the 182-day rule applies.)

Step 2: Gather Your Documents

• Valid Indian passport
• PAN card (required for most GIFT City transactions)
• Overseas address proof (utility bill, bank statement, less than 3 months old)
• Visa or work permit from your country of residence
• Tax Residency Certificate (helpful for DTAA claims)
• FATCA declaration (if you're a US person or have US tax obligations)

Step 3: Choose Your Investment Avenue

This depends on your capital, risk appetite, and goals:

• Starting small ($500+)? GIFT City mutual funds (Tata, and more AMCs launching regularly)
• Mid-range ($5,000 to $50,000)? Fixed deposits with IBUs, or a mix of FDs and mutual funds
• Higher capital ($75,000+)? AIFs for diversified exposure to private equity, real estate, and venture capital
• Insurance needs? USD-denominated ULIPs or term plans from IFSC-registered insurers

Step 4: Open Your GIFT City Account

Most banks and AMCs now offer digital onboarding with video KYC. You don't need to visit India. Contact the IBU of your preferred bank (HDFC, ICICI, Axis, SBI, Kotak all have IFSC units) or invest directly with the fund house.

Step 5: Monitor and Stay Compliant

Keep your filings up to date in both India and your country of residence. GIFT City returns are tax-free in India for most products, but you must pay taxes according to your home country's rules. For UAE NRIs with no capital gains tax, this is essentially a full exemption. For UK, Singapore, and European NRIs, consult a cross-border tax advisor.

GIFT City vs. The Old Way: A Quick Comparison

Things to Watch Out For

I'd be doing you a disservice if I painted this as a purely rosy picture. A few things to keep in mind:

1. GIFT City is still maturing. The ecosystem is growing fast, but the range of NRI mutual funds and products is still narrower than what's available on the mainland. This is changing rapidly, especially with the April 2026 fund relocation rules.
2. Not all products suit everyone. AIFs still require $75,000 minimum, which isn't small change. If you're starting your NRI investment in India journey, mutual funds at $500 are the sensible starting point.
3. Tax treatment varies by country. The India-side exemptions are clear. But your home country's treatment of GIFT City returns depends on local laws and DTAA provisions. A UK NRI and a UAE NRI will have very different net outcomes. Get proper advice.
4. Don't ignore your home country compliance. GIFT City simplifies the India side, but you still need to report foreign investments in your country of residence. UK residents, for instance, have HMRC reporting obligations. Singapore has its own rules. Don't assume "tax-free in India" means "tax-free everywhere."

Wrapping Up

GIFT City is, in my view, the single most important development for NRI investment in India in the last decade. It solves the three biggest pain points: currency risk, tax inefficiency, and repatriation friction. And with the tax holiday running until 2030, the government is clearly committed to making this work.

Whether you're an NRI in Dubai looking at NRI mutual funds to start small, or a high-net-worth NRI in London exploring AIFs and dollar-denominated insurance, GIFT City now offers a legitimate, regulated, and tax-efficient pathway to participate in India's growth without the old headaches.

The minimum investments have dropped. The product range is expanding. The digital onboarding means you don't even need to visit India.

So if you've been sitting on the fence about investing back home... the fence just got a lot less comfortable.

See you around, becoming an Intelligent Investor!

Ready to Start Your Investment Journey?

i2Finserv specialises in NRI mutual funds, NRI insurance solutions, and FEMA compliance advisory for NRIs and foreign nationals. Based in Faridabad, Delhi NCR, serving global clients across UAE, UK, Singapore, and Europe.

Whether you need help with NRI tax planning and ITR filing, choosing the best investment for NRI through GIFT City, or navigating FEMA compliance, we're here to help.

Disclaimer 1: All above views are purely for educational purposes and are not to be taken as investment advice. Investment or trades taken of any kind based on this are solely the person's risk and I bear no liability. Please consult a financial advisor before making any investments. All investments are subject to market risks.

Disclaimer 2: The views presented above are mine and not of any organization(s) I work with / studying at / am employed at.