For a foreign fund manager or family office, GIFT City is the one place to run an India-focused, dollar-denominated vehicle under a single regulator, claim a long but conditional tax holiday, and sit next to the asset rather than three time zones from it. Since the IFSCA (Fund Management) Regulations came into force in 2025, the rules are clearer and the entry thresholds lower than before. The benefits, though, are specific and earned: the right entity, real substance and clean compliance decide whether any of them actually apply.
At a glance
- one regulator (IFSCA) and one 2025 rulebook spanning funds, family offices, finance and leasing;
- an 80LA deduction of 100% of specified income for any 10 of the first 15 years, subject to conditions;
- specific capital-gains exemptions for non-residents and specified funds, not a blanket exemption;
- GST that is concessional, not absent, and varies by the direction of the supply;
- unlike Dubai or Singapore, the regime works without relocating, but only with genuine substance.
Why GIFT City, and why now
GIFT City is the International Financial Services Centre at GIFT, regulated by the IFSCA. In five years it has moved from ambition to a working centre with more than a thousand registered entities and a banking base measured in the tens of billions of dollars. For a foreign investor, three structural facts matter more than the headline numbers.
There is now one regulator for everything. Since 2020 the IFSCA has issued more than forty frameworks and, in 2025, consolidated fund activity into a single rulebook, so the fund, the family office, the finance company and the leasing vehicle answer to one authority rather than the onshore patchwork of separate regulators that governs the rest of India.
The 2025 reforms also lowered the barriers. The minimum corpus for a non-retail scheme fell from USD 5 million to USD 3 million, the placement-memorandum window doubled to twelve months, and a platform-play model now lets an established manager host schemes for others, so a first-time manager can launch for materially less than before.
And the point most comparisons miss is that GIFT City does not ask you to leave anywhere. India taxes its residents on worldwide income, so the headline tax advantages of Dubai or Singapore are realised mainly by those who actually relocate and re-domicile. GIFT City gives offshore-style treatment inside a jurisdiction that is legally part of India and physically next to the assets, which is what a foreign investor who wants India exposure, rather than a new home, is looking for.
Who GIFT City is for, and who it is not
It suits a foreign fund manager raising capital for an India or regional strategy, a Gulf or global family office that wants a regulated dollar platform without moving the family, and a group that wants to centralise treasury or leasing close to the India business. It is not a general India market-entry point for an operating company, which belongs onshore, and it is not a way to avoid substance. Read GIFT City as a financial-services jurisdiction for capital, not as a shortcut around the India tax base.
What you can set up
GIFT City is a menu, and choosing the wrong item is the most expensive early mistake. The main vehicles for a foreign investor:
A fund and its manager
Pooled capital runs through a Fund Management Entity, which registers as an Authorised FME, a Registered FME (Non-Retail) or a Registered FME (Retail), each with its own net-worth requirement. Most foreign managers use a Non-Retail FME running a Restricted Scheme for sophisticated and institutional investors, and the scheme can invest globally as well as into India. The fund-setup piece below covers the categories, the thresholds and the steps.
A single-family vehicle
A family can run a self-managed Family Investment Fund, registered as an Authorised FME, with a corpus of USD 10 million within three years and a light-touch regime designed for one family rather than a third-party business. It can hold almost any global asset class and can be a company, a contributory trust or an LLP, which makes it a succession and consolidation vehicle as much as an investment one.
A treasury or finance company
Groups use an IFSC finance company or treasury unit to centralise intra-group lending, cash management and hedging in dollars, inside the applicable reliefs and outside the domestic indirect-tax net, which can simplify a group that today runs its regional treasury from several places.
Aircraft and ship leasing
GIFT City has a dedicated framework for aircraft and ship leasing, which has drawn lessors who previously booked these assets through other offshore centres such as Ireland. For non-residents, royalty or interest on an aircraft or ship leased from an IFSC unit can be exempt under section 10(4F), where the unit commenced on or before 31 March 2030. It is a specialised business with its own asset, financing and registration considerations, so it rewards a real operating presence rather than a passive booking.
The tax picture, in outline
The reliefs are real but conditional, and the detail sits in the dedicated tax piece. In outline: section 80LA gives a 100% deduction of specified income for any ten consecutive years in the first fifteen, subject to approved-activity and foreign-exchange conditions; capital-gains and derivative exemptions under sections 10(4D), 10(4E) and 10(4F) are written mainly for non-residents and specified funds on defined instruments; GST is concessional rather than absent and turns on the direction of the supply; and transactions in specified securities on a recognised IFSC exchange are free of securities transaction tax, commodities transaction tax and stamp duty. None of this is automatic, and all of it assumes substance.
The condition behind all of it: substance
Every GIFT City benefit assumes a real, staffed, decision-making presence in the centre, income received in foreign exchange where the provision requires it, and the approvals the rules specify. India's general anti-avoidance rule, the principal-purpose test and the multilateral instrument apply to an IFSC structure as they do to any other, so a thinly-staffed unit can have its benefits unwound. The office and the people are not overhead; they are part of how the reliefs are earned, and they should be budgeted from the start.
GIFT City and the alternatives
For an India-bound vehicle the practical answer is often a corridor rather than a single winner: a UAE base for the regional capital and a GIFT City vehicle as the regulated gateway into the India asset. The corridor and comparison piece sets out GIFT City against Singapore, the UAE centres and Mauritius in detail, and explains when each one actually wins.
Where this goes wrong
- Treating registration as the benefit. The holiday, the exemptions and any treaty access assume a real, staffed, decision-making presence; a nameplate fails the test.
- Choosing the wrong vehicle. A fund, a family fund and a finance company carry different rules and thresholds; the wrong one over- or under-qualifies you.
- Reading the resident playbook. Much GIFT City content is written for Indian residents; a foreign investor's analysis on gains and repatriation is different.
- Assuming treaty benefits are automatic. India's anti-avoidance rule and the principal-purpose test apply, so the benefit depends on a real commercial presence and purpose.
How ATB Corporate helps
We set up and run the full GIFT City structure for foreign managers and families, and the India downstream that makes it work: the right FME category and scheme, the Family Investment Fund where a single family is involved, the substance and staffing, the FEMA and tax position on the India investments, and the treaty and transfer-pricing analysis that keeps the benefits defensible. If you are weighing GIFT City against Singapore or a UAE structure, we give you the corridor view rather than a brochure.
Talk to ATB about your GIFT City and India structure →
FAQ
Can a foreign (non-Indian) investor use GIFT City?
Yes. The fund (FME) and Family Investment Fund routes are open to foreign managers and families, and IFSCA has registered foreign family-office funds under the 2025 rules. The advantage for a foreign investor is India-proximate, treaty-accessible structuring without relocating, provided the unit has genuine substance.
Is GIFT City tax-free?
No. It offers specific, conditional reliefs: the 80LA deduction on specified income, non-resident exemptions on defined instruments under sections 10(4D)/(4E)/(4F), concessional GST, and STT and stamp-duty relief on recognised IFSC exchanges. Each carries conditions, and several depend on commencement by 31 March 2030.
Do I have to move to India to use GIFT City?
No, and that is the core distinction from Dubai and Singapore. GIFT City gives offshore-style treatment inside India's jurisdiction, so a foreign investor can target India without relocating, while still needing real substance in the centre.
Is GIFT City a way to enter the Indian consumer market?
No. It is a financial-services centre for funds, family offices, finance and leasing. An operating business that sells into India is set up onshore; GIFT City is for the capital and structuring layer, which can sit above an onshore India operation.
What is the catch?
Substance and conditionality. The reliefs are generous but specific, they assume a genuine presence and foreign-exchange receipts, and they are tested against India's anti-avoidance rules. Used properly the regime is robust; used as a paper layer it is not.
Key references
IFSCA (Fund Management) Regulations 2025; Income-tax Act, sections 80LA and 10(4D)/(4E)/(4F); IGST Act, section 16; SEZ Act and Rules; IFSCA frameworks for finance companies and aircraft/ship leasing.
This article is general information and not tax or legal advice. Laws and IFSCA rules change, and positions should be confirmed for your specific circumstances before being relied upon.