GIFT CITY OPENS A DOLLAR-DENOMINATED ROUTE FOR NRIs TO ACCESS INDIAN MUTUAL FUNDS

OVERVIEW

• GIFT City IFSC continues to develop as a channel through which global investors access Indian financial markets, with fund structures increasingly designed around non-resident participation.
• The Wealth Company has launched The Wealth Company IFSC FoF, an open-ended Category III Alternative Investment Fund (AIF) at GIFT City International Financial Services Centre (IFSC), which will allow eligible non-resident investors, including NRIs, to gain exposure to a portfolio of Indian mutual funds and exchange-traded funds (ETFs) through a single, US-dollar-denominated investment structure.
• The fund is managed by the IFSC branch of Wealth Company Asset Management Private Limited, a Fund Management Entity registered with the International Financial Services Centres Authority (IFSCA).
• For eligible overseas investors, the proposition is essentially instead of selecting and investing in multiple Indian mutual fund schemes themselves, they can invest in one professionally managed fund-of-funds that makes those allocation decisions for them.

A NEW DOLLAR-DENOMINATED ROUTE

• The fund is denominated in US dollars and is structured through GIFT City IFSC.
• According to the fund’s launch information, eligible investors accessing the underlying Indian mutual fund portfolio through the FoF would not separately be required to undertake SEBI’s Foreign Portfolio Investor (FPI) registration process for the underlying portfolio.

WHO CAN INVEST

• The fund is open to eligible NRIs, HNIs and UHNIs, accredited investors, global family offices and institutional allocators.
• Resident Indians cannot invest. The fund also currently excludes investors resident in the US and Canada, as well as investors from jurisdictions restricted under applicable Financial Action Task Force (FATF) rules.
• This is particularly relevant for NRIs because US- and Canada-based investors face additional regulatory and tax considerations when investing in Indian investment products.

HOW THE STRUCTURE WORKS

• The Wealth Company IFSC FoF is designed so that investors do not need to select individual Indian mutual funds themselves. Instead, the fund manager will allocate across the wider mutual fund and ETF universe in line with the fund’s investment strategy.
• The selection process will consider factors such as historical performance, risk parameters, quantitative indicators, relative performance and the fund manager’s forward-looking assessment.
• The portfolio may include diversified equity funds, sectoral strategies, fixed-income funds, hybrid funds, gold and silver ETFs, index strategies and Specialised Investment Funds (SIFs), subject to the fund’s mandate.
• In effect, the investor holds a single portfolio, while the underlying fund selection and allocation decisions are managed professionally.

TAX AND REGULATORY CONSIDERATIONS

• The fund is structured as an IFSC-based Category III AIF and is intended to qualify as a “Specified Fund” under the applicable income-tax framework, subject to satisfaction of the prescribed conditions.
• Where those conditions are met, specified income relating to eligible non-resident investors may qualify for exemption from Indian income tax, and certain return-filing requirements may also be relaxed in prescribed circumstances.
• The final tax outcome will, however, depend on the investor’s country of residence and applicable DTAA provisions.

Conclusion

• The launch of this fund further strengthens GIFT City’s reputation as India’s emerging international financial hub.
• By enabling dollar-denominated investment structures, professionally managed access to Indian assets and dedicated solutions for NRIs and global investors, GIFT IFSC is steadily building the depth and credibility expected from a global financial centre.
• The growth of fund managers, family investment structures and rising capital commitments within the IFSC also demonstrates increasing confidence in the ecosystem.
• As more international products and institutions establish themselves in GIFT City, it can enhance India’s ability to attract and manage global capital domestically while positioning GIFT IFSC as a credible alternative to established overseas financial centres.