(Commonwealth_India) India’s wealthiest families are increasingly leveraging a newly accessible investment pathway to gain exposure to global markets through Gujarat International Finance Tec-City (GIFT City), the country’s low-tax international finance hub. This shift has enabled them to bypass stringent capital controls and diversify their assets beyond domestic boundaries, reflecting a broader appetite among high-net-worth individuals (HNWIs) for international investment opportunities.
Recent data reveals that investments routed abroad via funds in GIFT City more than tripled to $778 million during the six months through December 2024. This significant uptick follows a policy change in June when the Reserve Bank of India (RBI) opened the Overseas Portfolio Investment (OPI) route for family offices. Traditionally, capital controls have limited Indian residents to transferring no more than $250,000 per year overseas under the Liberalised Remittance Scheme (LRS). However, by channeling investments through a corporate structure based in GIFT City, family offices can allocate up to 50% of a company’s net worth abroad—potentially translating into billions of dollars for the ultra-rich.
The International Financial Services Centres Authority (IFSCA), which regulates GIFT City, acknowledged that the surge in overseas investments includes contributions from foreign investors as well, though it did not specify how much of the increase was attributable specifically to the OPI route. As of December 2024, overseas investments accounted for about 11% of the $7 billion raised by funds operating out of GIFT City. Despite the focus on global exposure, the majority of fundraising efforts within the hub still target domestic investments.
According to Gautami Gavankar, president at Kotak Mahindra Bank Ltd.—one of India’s leading wealth managers—the move toward GIFT City underscores a growing desire among wealthy Indians and family offices to globally diversify their investment portfolios. While the LRS cap allows only limited international investment, the OPI route opens up significantly larger avenues for capital deployment through the GIFT City framework.
The rise in overseas investing comes at a time when India’s domestic equity market has faced headwinds, with the benchmark stock index dropping around 7% from its peak in September 2024. This correction has spurred many affluent investors to seek opportunities abroad, especially following a sustained period of wealth accumulation in the world’s most populous country.
Despite this liberalization, Indian authorities remain cautious. In 2023, regulators halted new registrations for family offices establishing funds in GIFT City amid concerns about potential misuse for tax evasion and circumvention of capital controls. This move reflects a broader regulatory balancing act between encouraging global integration and safeguarding domestic financial stability.
Still, within the current framework, outbound investment by individuals has seen a marked increase. Between June and December 2024, Indians remitted $795 million overseas for investments in equities and debt instruments—a 36% increase compared to the same period a year earlier.
Legal and financial advisors are now structuring sophisticated vehicles to facilitate cross-border investments. Siddharth Shah, a partner at Khaitan & Co., noted a trend among wealth managers to collaborate with prominent global private equity and venture capital firms to set up feeder funds in GIFT City. These funds serve as conduits for channeling Indian family office capital into international markets.
The demand for global exposure is not confined to public equities. While U.S. tech giants like Apple, Amazon, and Tesla remain popular targets, there is also growing interest in alternative investment vehicles, such as private credit funds. Gavankar emphasized that investors are exploring a diverse range of global assets through the GIFT City framework.
With direct family office investments temporarily paused, many investors are increasingly turning to portfolio managers and alternative investment funds to access the OPI route. This has led to a wave of new fund registrations in GIFT City, with at least 10 alternative funds receiving licenses each month, according to Dev Sampat, co-founder of fund administrator Dovetail Group, which oversees $2.1 billion in assets.
Major asset managers are also capitalizing on this momentum. Aditya Birla Sun Life Asset Management Co. recently concluded a $70 million fundraising round for a fund targeting Asian emerging markets. Some of this capital came via the OPI route. The firm is now preparing to raise another outbound fund, this time focused on U.S. equities. Similarly, Mirae Asset Investment Managers India plans to launch a fund out of GIFT City aimed at raising $200 million from affluent Indian investors using both the remittance channel and OPI route.
Global investment giants are also adapting their strategies. ASK Investment Managers, backed by Blackstone, is currently working on a feeder fund from GIFT City to facilitate future contributions to the Blackstone Private Equity Strategies Fund LP. According to Nishant Agarwal, Senior Managing Partner at ASK Private Wealth, most Indian family offices hold wealth through corporate structures like companies, trusts, and partnerships, which are generally restricted from making global investments under existing capital regulations. The OPI route, he said, opens a new realm of possibilities for these substantial pools of wealth.
As India continues to produce billionaires and global business leaders at an accelerating pace, the evolving role of GIFT City as a gateway to international financial markets is poised to grow in prominence. The current trend suggests a burgeoning outbound investment movement, driven by a desire for diversification, access to international growth stories, and participation in the broader global economy.
