Key Takeaways
- • Jay Kothari, executive director and international business head at DSP Asset Managers, says GIFT City can become a credible alternative to Singapore and Dubai, with regulatory predictability, product innovation and ease of doing business determining its ability to attract global capital, per an exclusive Fortune India interview.
- • GIFT IFSC offers non-resident Indians (NRIs) and global investors a dollar-denominated framework to access Indian markets, but Kothari stresses that dollar denomination does not eliminate rupee currency risk when underlying assets are Indian securities.
- • Kothari says several fund managers and financial institutions have already set up operations in GIFT IFSC or are evaluating a shift from traditional offshore jurisdictions.
- • GIFT IFSC's ecosystem now extends beyond fund management to banking, insurance, custody, brokerage and specialised activities such as aircraft and ship leasing.
- • Kothari cautions that route choice should depend on the investor's objectives, tax residency and investment structure, and that NRIs should seek qualified tax advice in each relevant jurisdiction.
Summary
GIFT City can emerge as a credible alternative to established international financial centres such as Singapore and Dubai, according to Jay Kothari, executive director and international business head at DSP Asset Managers. In an exclusive interview with Fortune India, Kothari said regulatory predictability, product innovation and ease of doing business will determine whether GIFT International Financial Services Centre (IFSC) can attract global capital.
Kothari said GIFT IFSC offers global investors, particularly non-resident Indians (NRIs), a dollar-denominated framework to access Indian markets. Investing directly in India through conventional routes can involve currency conversion and additional tax and reporting requirements, while the GIFT IFSC structure can simplify the experience depending on the product and the investor's circumstances. He cautioned, however, that a dollar-denominated product investing in Indian securities remains exposed to rupee movements: a depreciating rupee can lower dollar returns, while appreciation can boost them.
Kothari said GIFT IFSC has grown faster and across a broader range of financial services than many expected, and that several fund managers and financial institutions have already set up operations there or are evaluating a move from traditional offshore jurisdictions. He said sustaining this momentum will depend on regulatory predictability, ease of doing business, product innovation and the depth of the overall ecosystem. He added that the opportunity is to combine global standards with direct access to India's capital markets rather than simply replicate other centres.
On alternative investment funds (AIFs), Kothari said a deeper AIF ecosystem can give high-net-worth individuals (HNIs) greater choice across strategies, risk profiles and time horizons, but that these products can carry greater complexity, different liquidity profiles and higher risks, making investor understanding essential. He also said that clarity on the continuity of tax incentives, including their extension through 2030 where applicable, gives institutions greater visibility for long-term decisions on domiciling funds and deploying capital.
For NRIs, Kothari advised evaluating their country of tax residence, the nature of the investment, fund structure, applicable tax rules, reporting obligations, costs, liquidity and currency exposure before choosing a route. He noted that GIFT IFSC can offer a convenient and potentially tax-efficient route, but that benefits are not identical for every investor or product. Kothari said GIFT IFSC's next steps include simplifying processes, addressing operational bottlenecks, providing regulatory clarity and broadening product range and international distribution.
Kothari said GIFT IFSC offers global investors, particularly non-resident Indians (NRIs), a dollar-denominated framework to access Indian markets. Investing directly in India through conventional routes can involve currency conversion and additional tax and reporting requirements, while the GIFT IFSC structure can simplify the experience depending on the product and the investor's circumstances. He cautioned, however, that a dollar-denominated product investing in Indian securities remains exposed to rupee movements: a depreciating rupee can lower dollar returns, while appreciation can boost them.
Kothari said GIFT IFSC has grown faster and across a broader range of financial services than many expected, and that several fund managers and financial institutions have already set up operations there or are evaluating a move from traditional offshore jurisdictions. He said sustaining this momentum will depend on regulatory predictability, ease of doing business, product innovation and the depth of the overall ecosystem. He added that the opportunity is to combine global standards with direct access to India's capital markets rather than simply replicate other centres.
On alternative investment funds (AIFs), Kothari said a deeper AIF ecosystem can give high-net-worth individuals (HNIs) greater choice across strategies, risk profiles and time horizons, but that these products can carry greater complexity, different liquidity profiles and higher risks, making investor understanding essential. He also said that clarity on the continuity of tax incentives, including their extension through 2030 where applicable, gives institutions greater visibility for long-term decisions on domiciling funds and deploying capital.
For NRIs, Kothari advised evaluating their country of tax residence, the nature of the investment, fund structure, applicable tax rules, reporting obligations, costs, liquidity and currency exposure before choosing a route. He noted that GIFT IFSC can offer a convenient and potentially tax-efficient route, but that benefits are not identical for every investor or product. Kothari said GIFT IFSC's next steps include simplifying processes, addressing operational bottlenecks, providing regulatory clarity and broadening product range and international distribution.
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