GIFT City Investing: How to Invest in Global Markets from India

Learn how GIFT City lets Indian investors buy US stocks, global ETFs, bonds, and more. Step-by-step guide with process, tax rules, and benefits explained.
August 11, 2025
Step-by-step guide to GIFT City investing for Indian investors – process, benefits, and tax rules

GIFT City Investing: Step-by-Step Guide for Indian Investors

Imagine buying shares of Apple or Tesla without the hassle of opening a US brokerage account. Sounds impossible? Not anymore.

With the launch of GIFT City - India’s first International Financial Services Centre (IFSC) - investors can now access global markets right from India, with fewer compliance headaches and potential tax perks.

This isn’t just another policy change - it’s a shift in how Indian investors can participate in the world economy. In this guide, we’ll walk you through what GIFT City is, IFSC, and exactly how you can invest through it.


What is GIFT City & IFSC?

GIFT City stands for Gujarat International Finance Tec-City. It’s located between Ahmedabad and Gandhinagar in Gujarat and is designed to be India’s own version of global finance hubs like Singapore or Dubai.

Inside GIFT City, there is a special zone called the International Financial Services Centre (IFSC). This IFSC is treated as if it’s “offshore” for certain financial activities - even though it’s physically in India.

Why Did India Create GIFT City?

Before GIFT City, wealthy Indians and companies often invested abroad through hubs like Singapore or Mauritius to enjoy easier global market access and tax benefits. This meant money was flowing out of India and those transactions were outside India’s jurisdiction. By setting up GIFT City IFSC, India brought foreign market access and tax-friendly rules inside its own borders.

How IFSC Works in Practice:

Think of IFSC as a financial gateway:

  • It operates under its own regulator - the International Financial Services Centres Authority (IFSCA).
  • Transactions here are in foreign currency (mostly USD).
  • Brokers, banks, and fund houses set up special IFSC branches that can directly connect you to global markets.

Key Advantages of IFSC Status:

  • Regulatory clarity with one central authority (IFSCA).
  • Tax incentives for certain securities and entities.
  • Seamless global access without full overseas account formalities.

Investment Options in GIFT City

Through GIFT City’s International Financial Services Centre (IFSC), you can access a variety of global and domestic investment products - many of which were harder or costlier to access earlier.

1. US & Global Stocks

  • Buy shares of companies like Apple, Microsoft, Tesla, or Amazon directly.
  • Available via your broker’s IFSC trading platform, usually in USD.
  • Can also trade on other major exchanges (like London or Hong Kong) if the broker offers them.

2. Global Exchange-Traded Funds (ETFs)

  • Low-cost access to diversified baskets like:
    • S&P 500 ETFs (broad US market exposure)
    • Nasdaq 100 ETFs (tech-heavy index)
    • Thematic ETFs (e.g., clean energy, AI, global healthcare)
  • Trades like a stock, but represents a basket of securities.

3. International Mutual Funds

  • Some AMCs run IFSC-based feeder funds that invest in:
    • Global equity funds
    • Global bond funds
    • Region-specific funds (e.g., US, Europe, Asia)
  • Ideal if you want professional management without directly picking foreign stocks.

4. Foreign Bonds & Debt Instruments

  • Access to USD-denominated bonds issued by:
    • Global corporations
    • Multilateral agencies
    • Sovereign governments
  • Useful for investors seeking steady income in foreign currency.

5. Alternative Investment Funds (AIFs)

  • IFSC-registered AIFs may invest in:
    • Pre-IPO companies globally
    • Private equity
    • Hedge fund strategies
  • Usually for high-net-worth individuals (minimum ticket size ₹1 crore+).

6. Other Products

  • Structured notes
  • Commodities (in certain permitted forms)
  • International REITs (real estate investment trusts)

How GIFT City Investing Works

Think of GIFT City IFSC as a bridge between your Indian bank account and global stock exchanges. You’re still in India, but your transactions are handled in a way that’s treated like an offshore investment.

The Money & Transaction Flow

  • You (Investor) → Have an Indian bank account with outward remittance facility.
  • Liberalised Remittance Scheme (LRS) → You send money (in INR) to your broker’s GIFT City IFSC account, which is denominated in USD or another foreign currency.
  • IFSC Broker → Acts like a foreign brokerage but is registered in GIFT City. They route your orders to international markets.
  • Global Markets → You can buy US stocks, global ETFs, foreign bonds, etc.
  • Back to You → If you sell, proceeds come back to your IFSC account in USD, then can be converted to INR and sent back to your Indian bank.

Key Enabler: LRS

The Liberalised Remittance Scheme by RBI allows Indian residents to send up to USD 250,000 per financial year abroad for investments, education, travel, etc. Funding your GIFT City IFSC account falls under this limit.


Step-by-Step: How to Start Investing via GIFT City

If you’re new to GIFT City investing, here’s the exact process to get started:

Step 1 - Choose an IFSC-Registered Broker

Look for Indian brokers with an IFSC branch in GIFT City (e.g., Kotak Securities IFSC, Zerodha IFSC, HDFC Securities IFSC).

Check their:

  • Product offerings: stocks, ETFs, bonds, funds
  • Fees: account opening, annual maintenance, transaction costs
  • Platform usability: web/app experience, research tools

Step 2 - Complete IFSC Account Opening & KYC

Fill in the broker’s account-opening form for their GIFT City IFSC entity. Provide:

  • PAN
  • Aadhaar/Passport
  • Bank details (for LRS transfers)
  • Proof of address

Note: This is separate from your normal Indian brokerage account.

Step 3 - Fund Your IFSC Account via LRS

Approach your bank (most major banks have LRS forms online). Fill the LRS remittance form stating:

  • Purpose code: Investment in overseas securities (including IFSC)
  • Amount: in INR, converted to USD (or another currency your broker accepts)

The bank transfers funds to your broker’s IFSC account.

Step 4 - Place Your Orders

Once funds reflect in your IFSC account (usually 1–3 working days), you can:

  • Buy US-listed stocks & ETFs
  • Invest in global mutual funds
  • Purchase foreign bonds or other products your broker offers

Step 5 - Monitor Your Portfolio

Track performance in your broker’s IFSC platform.

Remember: Prices move due to both the asset’s performance and USD–INR exchange rate changes.

Step 6 - Withdraw Funds When Needed

  • Sell your investments.
  • Broker credits proceeds in USD to your IFSC account.
  • Request repatriation to your Indian bank (converted back to INR).

Tax Treatment for GIFT City Investments

Even though your broker is in Gujarat, remember:

  • GIFT City IFSC accounts are treated as “offshore” investments for tax purposes.
  • You still have to report gains and pay taxes in India, but the rules can be more favourable for certain products.

1. Capital Gains on Foreign Stocks & ETFs

  • Short-Term Capital Gains (STCG): If you sell within 24 months → taxed at your income tax slab rate.
  • Long-Term Capital Gains (LTCG): If you sell after 24 months → taxed at 20% with indexation benefit.

2. No STT, CTT, or GST

Unlike Indian stock transactions, you don’t pay Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), or GST on most IFSC trades.

This slightly improves your net returns.

3. Dividends

  • Foreign companies deduct withholding tax before paying you (for US stocks, usually 25–30% for Indian residents).
  • You can claim foreign tax credit while filing your Indian Income Tax Return (ITR) to avoid double taxation.

4. Debt Instruments

  • Interest income from foreign bonds via IFSC is taxed at 20% with indexation if held for over 36 months (as per current rules).
  • Some IFSC debt instruments have reduced or nil capital gains tax for specified periods if you’re eligible.

5. Disclosure in ITR

Investments via GIFT City IFSC are considered foreign assets for ITR purposes.

You must:

  • Report them in the Schedule FA (Foreign Assets) of your ITR.
  • Mention income/gains in relevant schedules.

6. Special Cases for NRIs

NRIs investing via GIFT City enjoy certain exemptions (especially if income is earned and retained in foreign currency), but need to check the Double Tax Avoidance Agreement (DTAA) with their country of residence.

Disclaimer: Tax rules may change. Please consult your tax professional for advice specific to your situation.


Ready to explore if GIFT City investing fits your financial plan?

At Finnovate, we help professionals like you understand your options, weigh the risks, and build strategies that fit your life goals - safely, surely, and swiftly.

Book a Consultation or Contact Us to discuss how global investing via GIFT City can work for you.


Final Thoughts

GIFT City has quietly changed the way Indians can invest beyond our borders. It combines the convenience of dealing with an Indian broker, the reach of global markets, and - depending on the product - some tax advantages that were earlier available only to overseas investors.

Whether you’re looking to diversify with US stocks, hedge currency risk, or tap into global bonds and funds, GIFT City gives you a legal, streamlined way to do it - all while keeping your investments within India’s regulatory framework.

Like any investment, it’s not risk-free. Currency swings, product-specific risks, and evolving regulations mean you should approach it as part of a balanced portfolio, not a replacement for domestic investments.


FAQs

1. Is GIFT City investing legal for Indian residents?

Yes. GIFT City operates under the International Financial Services Centres Authority (IFSCA) and is fully regulated. Investments are funded via the RBI’s Liberalised Remittance Scheme (LRS), which is a legal route for sending money abroad for investments.

2. Who can invest via GIFT City?

Resident Indians (using LRS), Non-Resident Indians (NRIs), Foreign investors (subject to applicable rules)

3. Do I need a separate account for GIFT City investments?

Yes. Even if you have a regular account with a broker, you must open a dedicated IFSC account with their GIFT City entity.

4. Is it cheaper than opening a foreign brokerage account?

Usually yes, especially for small to mid-size investments, because you save on SWIFT transfer fees and have Indian KYC & support.

5. Can I invest in cryptocurrencies via GIFT City?

Currently, no. Cryptocurrencies are not an approved investment product under IFSCA rules.

6. Do I still have to pay tax in India on GIFT City investments?

Yes. Gains, interest, and dividends are taxable in India, though certain IFSC products enjoy exemptions or reduced rates.

7. Can I keep my investment proceeds in USD?

Yes, you can keep them in your IFSC account in USD and reinvest without converting back to INR, until you choose to repatriate.

8. What happens if rules change?

IFSC regulations can change. Always check your broker’s latest updates and RBI/IFSCA guidelines before making large commitments.

9. Is GIFT City safer than sending money abroad?

From a compliance and dispute-resolution point of view, yes - it’s within Indian jurisdiction, regulated by IFSCA, with Indian customer support.


Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or tax advice. Please consult a qualified professional before making any investment decisions.


Published At: Aug 11, 2025 05:14 pm
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