Accreditation is your hack into GIFT City AIFs

Mint

2 days ago

MUMBAI
:
Accreditation is quietly reshaping access to global investing for Indian and NRI investors at India's gateway for global financial and capital market investments.
GIFT City is already home to a total of 229 alternative investment funds (AIFs) and venture capital (VC) funds, shows the January-March bulletin of the International Financial Services Centres Authority—the regulator for offshore finance.
The majority of these funds are inbound, allowing non-resident Indians (NRIs) and foreigners to invest in India, with assets worth $5.7 billion under management.
Outbound funds—enabling Indian investors to diversify globally—manage investments worth $842 million.
But both types of AIFs have a minimum ticket size of $150,000.
This is where accreditation comes in. It enables people with lower investments to access global markets, benefit from tax efficiencies, and diversify portfolios beyond traditional domestic options.
Accredited investors can invest as little as $10,000 into an AIF and scale over time.
Why invest via GIFT City
NRIs investing in India via GIFT City face easier paperwork, as there is no need to open an NRO (non-resident ordinary), NRE (non-resident external), portfolio investment scheme (PIS), or non-PIS account.
GIFT City houses the country's first International Financial Services Centre (IFSC) that is considered to be outside India from the point of view of the Foreign Exchange Management Act (FEMA) of 1999, allowing funds to be held in US dollars.
NRIs are also not taxed in India on investments routed via the offshore finance zone.
Indian residents, on the other hand, can only use outbound AIFs, and these, too, offer some advantages. One major advantage is that GIFT City is part of India from an income tax point of view and hence does not fall under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, and stringent disclosures for overseas assets.
Accreditation criteria
Under the current rules, individual investors must meet at least one of the following criteria to be accredited:
-Annual gross income of at least $200,000 in the preceding year, with a reasonable expectation of similar income in the current year.
-Net assets of at least $1 million (excluding the primary residence), with at least $500,000 in financial assets.
For entities, a net worth of at least $5 million is required.
Accreditation is verified by a fund management entity or any authorized entity based on recent financial statements. Once accredited, investors can complete know-your-customer (KYC) requirements through authorized channels in GIFT City, using digital processes such as Aadhaar and PAN verification.
Industry's view
Experts agree that beyond being a regulatory checkbox, accreditation has emerged as a strategic lever, enabling participation at significantly lower entry points, easing compliance, and broadening access to sophisticated investment strategies.
Sreepriya N.S., co-founder and director at Entrust Family Office, sees accreditation as a meaningful gateway for Indian high-net-worth individuals (HNIs) and family offices eager to diversify internationally without locking up large sums of capital.
'For accredited investors, this threshold can be significantly lower (sometimes as low as $70,000-$75,000, subject to fund and regulatory discretion), thereby widening the access for HNIs and family offices who are keen to diversify globally but may not want to commit large capital in one go," she noted.
Entrust is actively recommending accreditation to eligible clients, not just for access, but also for flexibility and efficiency. 'It strengthens their investor profile, enables smoother onboarding with multiple fund platforms, and improves access to deal flow," she added.
The strategic relevance of accreditation, Sreepriya said, is only expected to grow. 'Going forward, accreditation may serve as a core requirement for accessing other asset classes too (e.g., digital assets, structured notes), and getting in early helps build track record and familiarity," she explained.
Accreditation is becoming an enabler for a newer, aspirational cohort of wealthy investors, highlighted Aarthi Ramakrishnan, head of strategy at 360 ONE Asset. 'Accreditation enables access to curated strategies at lower ticket sizes, and it's particularly useful for younger HNIs or clients with targeted exposure requirements," she said.
The firm is actively working with both inbound and outbound structures via GIFT City.
Pranab Uniyal, head of HDFC Tru, the HDFC Group's advisory wealth platform, emphasized the dual benefit of regulatory access and operational efficiency. 'It lowers the minimum investment from $150,000 to $25,000, enabling broader participation and diversification across AIFs, especially in segments like private credit, hedge funds, venture capital, and special situations," he said.
For offshore investors, the structure offers convenience. 'No PAN or INR conversion required," he pointed out, adding that repatriation is seamless and tax-neutral under the IFSCA framework.
While many are focused on outbound opportunities, firms like Waterfield Advisors are looking inward.
'We are looking at GIFT AIFs primarily for inbound investments, and we are recommending investor accreditation to our clients," said Vishal Yeole, senior director and head of business advisory at Waterfield Advisors.
With growing NRI interest in India-focused strategies, the appeal of a streamlined, tax-efficient investment structure remains strong, he added.
As more fund managers set up in GIFT City and investor familiarity grows, the accreditation route could shift from niche to mainstream.
'The regulatory clarity and SEZ status of GIFT IFSC make it an excellent platform for Indian investors to access offshore products and for global investors to access India. As the ecosystem matures, the options are only expanding," said Ramakrishnan.
Ionic Wealth by Angel One has decided to strongly leverage accreditation to attract investors to its newly launched global outbound fund, which focuses on global technology and technology-enabler stocks. The fund's associate in GIFT City has also launched a similar fund.
'India's high-value investors are evolving—they seek aspirational opportunities and flexibility in their investments. Accreditation allows them to start small, diversify across strategies, and scale over time. With home-country bias still high among HNIs, GIFT City AIFs offer a compelling route to global diversification," said Ankita Pathak, chief macro and global strategist at Ionic Wealth.
The Ionic Global Innovation Fund is structured as an AIF, holds 20-35 stocks across the US, Asia, Europe, and Latin America.
It offers multiple share classes based on investment size, and each share class has its own fee. For example, the fixed fee for a $1 million investment is 1.25% but for $100,000 it is 2%.
Investors can also opt for a lower fixed fee combined with a performance fee, which applies to returns above a 5% USD hurdle rate over a three-year period, with a high-water mark.
Since the majority of funds listed in the GIFT City are AIFs, accreditation is the only available access route for small investors.
To be sure, DSP Asset Managers Pvt. Ltd launched India's first retail-focused offshore mutual fund—the DSP Global Equity Fund—from India's international financial hub in Gujarat in June, but it may be some time before a critical mass of such funds becomes available.