Decoding GIFT City: A New Frontier For Private Equity Investors

With “Tax Havens” and Startup Arenas opening up worldwide, why should India be far behind? Imagine a cutting-edge metropolis meticulously crafted to become a global financial hub, brimming with opportunities for private equity investors. Thinking Dubai? Think again! Being hailed as India’s first operational greenfield smart city and international financial services centre. The GIFT City is an unprecedented ecosystem for crucial economic activities with globally benchmarked regulations, taxation, policies – et al! 

Being hailed as the epicentre of Global Finance and IT, GIFT City could be considered a frontier for private equity investments. It has been set up to provide financial incentives, regulatory freedom and world-class infrastructure with unparalleled connectivity and transportation access.

The Promise Of GIFT City

Envision a domain where financial services claim centre stage, inspired by renowned global financial centres like London and New York. With a vision to become a global hub, GIFT City aspires to become a thriving ecosystem for private equity investors, venture capitalists, and financial institutions. 

With its strategic location and world-class infrastructure, GIFT City is poised to revolutionise India’s financial landscape, albeit with a much-needed streamlined set of regulations and procedures.

Special Economic Zone Status

GIFT SEZ or GIFT City possesses an added advantage—an esteemed Special Economic Zone (SEZ) status. This designation presents a plethora of advantages for private equity investors. Think tax incentives, relaxed regulatory processes, and a business-friendly environment. 

These perks have successfully enticed numerous domestic and international firms to establish their presence, fostering a melting pot of investment opportunities.

The International Financial Services Centre (IFSC)

Now, let us cast the spotlight upon the pulsating heart of GIFT City—the International Financial Services Centre (IFSC). This hub is where the magic happens. It stands as a sanctuary for global investors and businesses, offering extensive financial services. From banking and insurance to capital markets and asset management, the IFSC boasts an impressive repertoire. With international currency transactions permitted, it is no surprise that investors are flocking to this financial playground.

Smart City, Smart Investments

But wait, there’s more! GIFT City transcends the realm of mere monetary pursuits — it is also dedicated to sustainability and intelligent living. By integrating advanced technologies and digital infrastructure, the city aims to optimise energy consumption, reduce waste, and enhance the quality of life for its residents and investors alike. It is a win-win scenario: you can make shrewd investments while contributing to a greener and more sustainable future.

Opportunities For Investors: A Look Through The Recent Developments 

Whether you are a private equity investor, venture capitalist, or an astute individual with an eye for financial opportunities, GIFT City holds immense potential. It is time to explore this new frontier, seize its boundless possibilities, and become part of India’s remarkable journey towards financial excellence. Prepare to leave your mark on GIFT City, where the future of finance eagerly awaits your participation!

GIFT City, acknowledged as an international finance centre, is opening up new avenues of investment for High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) in India. The recent transformation of SGX Derivatives into GIFT City has been a significant development in this regard, attracting portfolio management services (PMS) providers to establish their presence in the city and offer inbound and outbound investment services.

Global portfolio management services offered by firms like PhillipCapital and Marcellus have created opportunities for Indian investors to access international markets. These services require a minimum investment of $150,000 and are subject to the Liberalised Remittance Scheme (LRS) limit of $250,000 per year. Investors can engage with international brokers or invest through mutual funds operating outside India to access global investment opportunities. GIFT City’s regulations allow PMS managers to invest in global securities, providing an avenue for Indian investors to diversify their portfolios internationally. By setting up a unit in GIFT City, these managers can offer international investment services to Indian citizens without establishing funds outside India.

The funds managed under GIFT City are regulated by the IFSCA (Fund Management) Regulations, 2022, and enjoy certain benefits. Portfolio managers in GIFT City can claim a tax deduction for 100% of their income earned for ten years, providing a significant incentive to operate within the city. Additionally, investors are not required to open a bank account in GIFT City, and taxation varies depending on residency status.

Several funds are already available in GIFT City, such as the Philip Ventures IFSC and Marcellus Global Compounders Portfolio. These funds provide opportunities for investors to access offshore products and invest in overseas stocks while leveraging the expertise of experienced fund managers.

However, investors need to conduct thorough research and assess the expertise of fund managers in international markets before investing through PMS in GIFT City. Understanding the background of the managers and their products is crucial to make informed investment decisions.

In conclusion, GIFT City’s offerings for private equity investors extend beyond domestic opportunities. The availability of PMS services, global funds, and tax benefits creates a favourable environment for HNIs and UHNIs to explore international investment avenues. However, investors should exercise caution and conduct due diligence before committing their capital to ensure alignment with their investment goals and risk appetite.

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