IFSC GIFT City: A Promising Hub for Global Investments in India

IFSC GIFT City: A Promising Hub for Global Investments in India
Feb 2024
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In a modern world that thrives on innovation and technology, IFSC GIFT City is a leap towards positioning India as a major player in the global financial market.

With its focused policies, tax incentives, regulatory clarity, IFSC GIFT City is becoming an attractive destination for global investors seeking to diversify their portfolios and tap into the true potential of offshore funds. In this blog, we delve into the purpose, benefits, and regulations that define the unique landscape of IFSC GIFT City.

What Is GIFT City?

Located at the heart of Gandhinagar, the Gujarat International Finance Tec-City, more commonly known as GIFT City, is one of the most transformative initiatives in India. Established with the vision of becoming a global financial and technological hub, GIFT City operates under the framework of an International Financial Services Centre (IFSC).

The International Financial Services Centres Authority (IFSCA) is established under the International Financial Services Centres Authority Act, 2019. The regulatory powers of RBI, SEBI, IRDAI, and PFRDA have been vested in IFSCA for regulating financial institutions, products, and services in IFSC at GIFT City. It is a special financial jurisdiction in India that allows investors to conduct foreign currency transactions with ease.

The hub is designed to serve both domestic and foreign businesses to set up operations within its premises. GIFT City aspires to contribute significantly to the Indian economy, creating jobs, fostering innovation, and bolstering the country's standing in the global financial arena.

IFSC GIFT City Benefits

Multiple key factors make IFSC GIFT City an attractive destination for investments both inbound and outbound:

1. Tax Benefits:
One of the primary benefits for businesses in IFSC GIFT City is the favorable tax regime. Companies operating within the IFSC are eligible for exemptions from various direct and indirect taxes.

2. Regulatory Flexibility:
IFSC GIFT City operates under a unique regulatory framework managed by the International Financial Services Centre Authority (IFSC). It allows for the introduction of new financial products and services and keeping pace with global market trends.

3. Ease of Registration:
The regulatory framework in IFSC GIFT City is designed to streamline the registration process for offshore funds. This results in faster approvals, reduced administrative burden, and quicker entry into the Indian market.

4. Access to Indian Markets:
Offshore funds in IFSC GIFT City can access Indian financial markets, providing global investors with an opportunity to tap into the rapidly growing Indian economy. This access is facilitated through simplified regulations and a dedicated trading platform within IFSC GIFT City.

5. Currency Diversification:
Offshore funds in IFSC GIFT City are typically structured to attract foreign investments. An important benefit of offshore funds is that they can operate in multiple currencies, making it easier for investors to manage currency risk.

6. Reduced Compliance Costs:
The regulatory regime in IFSC GIFT City is designed to reduce compliance costs for offshore funds. This includes simplified reporting requirements and streamlined procedures for fund managers, making it easier to operate within the city.

IFSC GIFT City Regulations

IFSC GIFT City operates under a unique regulatory framework. The International Financial Services Centres Authority (IFSCA) regulates and oversees the financial services activities within IFSC GIFT City.

1. Compliance Standards
IFSC GIFT City adheres to stringent compliance standards to maintain the integrity of its financial system. Stringent anti-money laundering (AML) and know-your-customer (KYC) regulations are in place to prevent illicit financial activities and promote ethical business practices.

2. Financial Products & Services:
The regulatory framework allows for the introduction of a diverse range of financial products and services. This flexibility encourages innovation in the financial sector, attracting companies that aim to pioneer new solutions and technologies.

3. International Exchanges:
International exchanges play a crucial role in facilitating the global trade of bullion, precious metals, and commodities. These platforms provide a centralized marketplace where buyers and sellers from around the world can engage in transparent and efficient transactions. Bullion exchanges enable investors to diversify their portfolios, hedge against inflation, and capitalize on fluctuations in precious metal prices.

Invest in Offshore Funds in IFSC GIFT City

Alchemy Investment Management LLP (Alchemy IM) is one of the registered Fund Management Entities with IFSCA and is one of the first fund house to migrate its offshore fund to GIFT City. Alchemy IM’s fund migration to IFSC GIFT City represents a step forward in the country’s goal of becoming a global financial hub. Alchemy IM offers investment management services in both Commingled Funds and Separately Managed Accounts.

Alchemy India Long Term Fund

Alchemy India Long Term Fund (The Fund) is one of the US dollar-denominated Schemes of Alchemy Alternative Investment Trust, registered with the International Financial Services Centres Authority (IFSCA). The Fund was incorporated in June 2008 in Mauritius (managed by Alchemy Investment Management Pte Ltd., Singapore) and in April 2023 was migrated (along with investments and investors) to GIFT City in India (managed by Alchemy Investment Management LLP).

The Fund has a long vintage of 15 years and a strong track record. It has returned a CAGR of 11.3% compared to the S&P BSE 500 ($)'s return of 6.7% as of January 31, 2024 and has delivered an annualized alpha of 4.6% since its inception in June 2008. It is a long-only Indian equity fund to generate long-term absolute returns on the investors’ capital by investing in Listed Indian equities, IPO opportunities, and Private Investment in Public Equity (“PIPES”) on listed Indian equities. In addition to the Fund, Alchemy IM also offers its expertise in form of Separate Managed Account. To know more, write to us at connect@alchemyim.com

Disclaimer:
This blog is for informational purposes only and should not be considered as an offer or solicitation to buy or sell any securities or make any investments. We recommend readers to take independent advice before taking any investment decisions. Please refer to our Disclaimer and Disclosures for more details.

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