GIFT City global fund launches gain momentum as India eases overseas access
Standard Chartered and Jio BlackRock are adding to fund activity at GIFT City, where rules offer a route around India’s outbound-investment cap.
By Theo Nakamura · Staff Writer
· 3 min read
GIFT City global fund launches are gathering pace, with Standard Chartered planning new products and Jio BlackRock approved to offer funds from India’s international finance centre. For investors, the draw is practical: funds based there can offer overseas-market exposure without facing the outbound-investment ceiling that constrains India-based asset managers, according to CNBC.
Gujarat International Finance Tec-City, known as GIFT City, sits in Gujarat, Prime Minister Narendra Modi’s home state. It is India’s first international financial services centre, built to help channel capital into India and give resident Indians access to international wealth products.
Standard Chartered said it plans to launch its Signature CIO funds from GIFT City in the coming weeks, CNBC reported. The bank began operating from the centre in 2020, and the planned launch would expand its wealth-management business there.
Jio BlackRock Asset Management, the venture between Jio Financial Services and BlackRock, received regulatory approval in May to launch funds from GIFT City, CNBC reported. Rishi Kohli, its chief investment officer, told Moneycontrol that the firm was preparing two outbound funds before the end of September: one focused on global equities and another on emerging markets.
Why are fund managers launching products from GIFT City?
The immediate reason is regulatory access. CNBC reported that India-based asset managers face a combined $7 billion limit on overseas investments, and that the available capacity had already been used. Funds operating from GIFT City are outside that aggregate cap, according to CNBC.
That distinction can matter for Indian investors looking beyond domestic shares. A fund set up in the centre can direct money toward overseas investments under GIFT City’s framework, while a conventional India-based manager may be constrained by the national limit.
Rajesh Gandhi, a Deloitte India partner, told CNBC that the government improved GIFT City’s tax structure earlier this year and loosened capital controls for outbound investments made through the centre. CNBC also cited demand among Indian investors for global-market exposure and more flexible foreign-currency rules as drivers of recent activity.
The ecosystem is expanding, though from a relatively early base. Government data cited by CNBC showed 217 fund-management entities in GIFT City in May, up from 194 in November of the previous year.
What does GIFT City change for investors and fund firms?
GIFT City is designed as a special economic zone overseen by the International Financial Services Centres Authority, or IFSCA. Phillip Capital, which operates a fund and global portfolio-management service there, told Subtext by Zerodha that the single regulator can reduce the administrative burden of dealing with several Indian authorities.
Phillip Capital said onboarding an NRI through its GIFT City fund takes two to three days, compared with 30 to 45 days through the traditional domestic route. Those are the firm’s own operational estimates, rather than independently verified industry-wide figures.
The progress does not put GIFT City on equal footing with established hubs such as Singapore or Dubai. Experts told CNBC that it still needs to move beyond an India-focused identity and improve the lifestyle offering for global financial professionals. Vivek Singhania, co-founder of Dovetail Capital, said GIFT City’s regulatory framework took shape around 2020, leaving the centre with less time to develop than mature rivals.
This story draws on original reporting from CNBC.
