GIFT City, the Gujarat International Finance Tec-City, is India's first International Financial Services Centre. It sits on Indian soil, between Ahmedabad and Gandhinagar, but is treated in law as offshore territory, regulated by the IFSCA rather than by the RBI and SEBI directly. Inside it, the working currency is the dollar, not the rupee. That single fact is what makes it useful.

What GIFT City mutual funds actually are

The most accessible product for an NRI is a feeder fund: a dollar-denominated fund based in GIFT City that channels your money into an established Indian mutual fund scheme. You get exposure to the same Indian equities you would otherwise, but your investment stays in dollars and the compliance runs through the lighter IFSC framework. Until recently these were built for large investors. That has changed. In early 2025 the minimum for alternative investment funds was cut to $75,000, and in September 2025 the first retail feeder fund launched with a minimum of just $500. GIFT City is no longer only for the very wealthy.

Beyond feeder funds, the menu is wider than most NRIs realise. Alternative investment funds cover private equity, credit, and hedge-fund-style strategies for larger tickets. IFSC banking units offer foreign-currency savings accounts and fixed deposits in dollars, pounds, and euros, with tax-free interest, a cleaner cousin of the old FCNR deposit. There are dollar bonds, listed REITs, and, through the IFSC exchanges, direct access to global equities like Apple or Amazon alongside Indian ones. It is closer to a full offshore private bank than a single product.

The tax and currency case

The appeal is not only convenience. For a non-resident, GIFT City offers real IFSC GIFT City tax benefits: no securities transaction tax, no commodities transaction tax, and no stamp duty on transactions done on the IFSC exchanges. Gains on specified securities are exempt from tax in India for non-residents, and interest and dividend income from IFSC units is tax-free or taxed at concessional rates. For an NRI in a zero-tax country like the UAE, that can mean India exposure that is effectively untaxed on both ends.

The currency point is just as important. Because you invest and redeem in dollars, you never convert to rupees and back, and you are not exposed to the rupee on your principal the way a domestic investment would leave you. Given how much a falling rupee can quietly erode an NRI's returns, holding India exposure in dollars is a genuine advantage, not a technicality.

Set against the old default, the NRE fixed deposit, the contrast is stark. An NRE deposit pays rupee interest and leaves your principal exposed to the rupee, so a good headline rate can be undone by a weak year for the currency. A GIFT City dollar deposit or fund keeps both your interest and your capital in dollars. For an NRI whose costs are in dollars, that is usually the more honest form of safety.

The practical mechanics

Getting started is more straightforward than most NRIs expect. You open an account with an IFSC unit, complete KYC, which since 2025 can be done remotely by video, and transfer funds in foreign currency. From there you can access dollar funds, AIFs, foreign-currency deposits, bonds, and even global equities through the IFSC exchanges. NRIs from the US and Canada, who are usually shut out of ordinary Indian mutual funds, can invest here. And repatriation is simpler: because the money is treated as offshore, it moves out without the usual NRO route of chartered-accountant certificates and remittance forms.

What to weigh before you move

GIFT City is not automatically right for everyone. The product menu, though growing fast, is still narrower than the full Indian mutual fund universe. Some structures carry lock-ins. And the tax exemptions apply to your Indian tax position, not necessarily your tax at home, where your country of residence still gets its say. The right question is not whether GIFT City is good. It is whether it fits your residency, your currency, and your goals. The government has extended the tax holiday to March 2030, so there is time to get it right rather than rush.

Where this leaves you

For an NRI, GIFT City is the first structure that lets you back India's growth without betting against the rupee to do it. That is a rare thing, and worth understanding properly rather than through a bank's sales pitch.

Frequently asked questions

Who can invest in GIFT City funds?
NRIs and OCIs can invest, including those in the US and Canada who are usually restricted from ordinary Indian mutual funds. Resident Indians generally cannot subscribe to these inbound funds.
What is the minimum investment in a GIFT City mutual fund?
It has fallen sharply. Retail feeder funds now start at around $500, while alternative investment funds typically require $75,000 or more, usually with a lock-in.
Are GIFT City investments really tax-free?
For non-residents, many are exempt from Indian capital gains tax on specified securities, with no STT or stamp duty, and tax-free or concessional treatment of dividend and interest. Your tax at home still applies based on your country of residence.
Do I still deal with the rupee?
No. GIFT City funds are denominated in foreign currency, so you invest and redeem in dollars or another chosen currency. You are not converting to rupees, which removes the currency friction of ordinary Indian investing.
How do I open a GIFT City account as an NRI?
You open an account with an IFSC unit and complete KYC, which can now be done remotely by video, then transfer funds in foreign currency. An adviser can handle the onboarding and fund selection for you. This article is for information only and is not investment advice. Rules and tax treatment described here apply as of mid-2026 and can change. Please speak to a qualified adviser before acting. Sources for figures: IFSCA regulations and disclosures, Budget 2025, and public fund documents, 2025 to 2026. Verified July 2026.

SELEQT operates out of GIFT City, so SELEQT, based in GIFT City, can walk you through the mechanics and whether it belongs in your plan.