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Mint
16 hours ago
- Business
- Mint
New funds surge in GIFT City, but old money stays offshore
Moneybags from Mauritius, Singapore and Cayman Islands are yet to make the move to Gujarat's GIFT City given burdensome tax and compliance rules without commensurate benefits, industry executives said. While GIFT City has seen a steady rise in new funds, it has struggled to lure funds out of established offshore centres. As of March, India's financial centre had 229 funds, as per IFSCA quarterly bulletin. However, according to an official aware of the matter, a mere 13 of them, including Alchemy India Long Term Fund, Mirae Asset India Midcap Equity Fund and Artha Global Opportunities Fund have actually migrated from foreign jurisdictions. Among the reasons: Mandatory physical presence of employees, stiff compliance rules, and no added advantage for older close-ended funds making the shift. Local staff Every non-retail fund management entity in GIFT IFSC is required to have at least two individuals physically present—specifically, a principal officer and a compliance officer for managing Category I, II, and III alternative investment funds. (Retail funds must have at least three) Also, if the entity manages assets of $1 billion or more, it should appoint a third person. This is not the case in offshore financial centres, said Vinod Joseph, a partner at Economic Laws Practice. Mauritius allows funds to be set up in the form of companies and the directors of such companies are provided by local administrators, Joseph said. 'Such directors may also serve as directors for other companies, meeting regulatory requirements without needing a dedicated local team." Also read | Low-ticket Gift City funds are almost here. But what holds them back? Singapore does require full-time employees for fund management firms, but it is relatively easier to hire such personnel in Singapore and the people need to be employed locally only if assets exceed a certain size, Joseph added. 'In the case of an existing fund, the actual fund management team is often based outside India. Expecting them to relocate to GIFT IFSC solely to meet substance requirements is not easy," he added. Tax 'For certain sets of funds (Cat-I /II AIF), the fund will withhold tax and the same is available as credit in the hands of the investor, as GIFT funds are tax-transparent. This may not be the case for a Cat-III AIF and credit to the investors will be subject to their local laws," said Vivek Mimani, Partner at Khaitan & Co. 'In contrast, jurisdictions like Mauritius do not require investors to register for tax in India, as the fund itself pays tax and further distributions are tax-free," he said. An executive at a fund which recently relocated to GIFT IFSC said that even as the Indian jurisdiction is evolving and trying to align with international jurisdictions, layers of complexity remain. Artha Global Opportunities Fund, a Mauritius-headquartered and Sebi-registered fund investing in distressed assets and special situations in India said in December that it was the first foreign portfolio investor to move its domicile from Mauritius to GIFT City. Read this | Gift City sovereign green bonds face currency hurdle 'Once a fund relocates to GIFT City, it becomes subject to various domestic compliance obligations—GST registration, TDS, income tax filings, and more," said Sachin Sawrikar, managing partner, Artha Bharat Investment Managers IFSC LLP. 'For a fund which neither provides services nor sells products and typically earns passive income, the requirement to file monthly GST returns is particularly misaligned and burdensome," Sawrikar said. Sawrikar added that payments to foreign vendors, which would typically be tax-free elsewhere, attract withholding tax at GIFT City under India's Double Taxation Avoidance Agreement (DTAA) provisions. 'These additional taxes and compliance costs increase operational burden," Sawrikar added. Relocation is not for everyone For close-ended funds with a limited remaining duration—say, a 10-year fund in Mauritius that has already completed five–seven years—relocating to GIFT City often does not make financial sense. That is because the costs and efforts involved may outweigh the benefits, a person aware of the matter said. 'Relocation is also a time-consuming process that requires approvals from investors in the fund, regulators in the home jurisdiction, and the authorities at GIFT. As a result, many fund managers prefer to let existing funds run their course in their current jurisdiction and instead consider setting up new funds in GIFT City," the person said on the condition of anonymity. Also read | GIFT City isn't just for NRIs and foreigner investors—it has something for everyone Usually, one would not rock the boat if it is sailing right; only a few are willing to take that step, said Ketaki Mehta, a partner at Cyril Amarchand Mangaldas. She added that relocation requires setting up in GIFT IFSC, hiring an investment manager in GIFT City, building a team, and winding up elsewhere. What's ahead? Experts said the government has relaxed certain regulations to lure more funds to the GIFT City. 'Initially, all investors in a fund when the fund was relocating to GIFT IFSC were required to obtain a PAN. However, not every investor was comfortable with it, and recognizing that many of these investors had no other taxable income in India and were tax residents in other jurisdictions, the government relaxed the rule," said Ketaki. Now, non-resident investors who invest solely through IFSC funds and do not earn any other income in India are exempt from obtaining a PAN. 'This change, implemented in 2020, was aimed at streamlining processes and making it easier for foreign investors to participate in IFSC without facing redundant compliance obligations," she added. And read | Mauritius keen to set up shop in GIFT City
Mint
3 days ago
- Business
- Mint
GIFT Nifty sets all-time high monthly turnover of $102.35 billion in May 2025
GIFT Nifty, the leading derivative contract on the NSE International Exchange (NSE IX) at GIFT City, reached a record monthly turnover of $102.35 billion ( ₹ 8.75 lakh crore) in May 2025, setting a new benchmark for the platform. This figure exceeded the prior monthly peak of $100.93 billion achieved in April 2025. This exceeds its earlier peak of $100.93 billion, which was recorded in April 2025. Since beginning full-scale operations on July 3, 2023, GIFT Nifty has achieved a total turnover of $1.93 trillion, covering over 43.28 million contracts as of May 2025. 'We are glad to witness the success of GIFT Nifty and express our sincere gratitude to all the participants for their overwhelming support and making GIFT Nifty a successful contract,' NSE IX said in a statement. Indian retail investors are still unable to access GIFT Nifty through the Liberalised Remittance Scheme (LRS). Under this scheme, the Reserve Bank of India (RBI) prohibits using the annual $250,000 limit for leveraged trading, such as futures and options. However, Indian brokerages and their subsidiaries are allowed to onboard non-resident clients and wealthy Indian family offices. In addition to trading on their own behalf, they are permitted to execute trades for these clients. Established on June 5, 2017, NSE IX is a multi-asset international exchange located in GIFT City, functioning under the oversight of the International Financial Services Centres Authority (IFSCA). It dominates the market within GIFT IFSC with a market share exceeding 99%, offering a wide variety of instruments such as Indian single stock and index derivatives, currency derivatives, depository receipts, and global equities. The platform also supports the listing of various financial instruments, including equity shares, SPACs, REITs, InvITs, and ESG-linked debt instruments, all in accordance with IFSCA regulations. Both NSE IX and GIFT Nifty have received major regulatory approvals, including a Part 30 exemption from the CFTC and Class Relief from the SEC, enabling U.S.-based investors to trade derivative products on the platform. Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
3 days ago
- Business
- Economic Times
GIFT Nifty hits record monthly turnover of $102.35 billion in May 2025
GIFT Nifty, the flagship derivative contract traded on NSE International Exchange (NSE IX) at GIFT City, posted its highest-ever monthly turnover of $102.35 billion (Rs 8.75 lakh crore) in May 2025, marking a new milestone for the platform. This surpasses the previous monthly high of $100.93 billion recorded in April 2025. ADVERTISEMENT The total trading volume stood at 2.10 million contracts for the month, underscoring growing global investor confidence in GIFT Nifty as a benchmark for India's growth story. Since the launch of its full-scale operations on July 3, 2023, GIFT Nifty has recorded a cumulative turnover of $1.93 trillion, spanning more than 43.28 million contracts as of May 2025. 'We are glad to witness the success of GIFT Nifty and express our sincere gratitude to all participants for their overwhelming support,' NSE IX said in a statement. Also Read: India's top 10 priciest stocks in 2025: MRF to Elcid, see who tops the list Launched on June 5, 2017, NSE IX is a multi-asset international exchange operating at GIFT City and regulated by the International Financial Services Centres Authority (IFSCA). The platform commands over 99% market share within GIFT IFSC and offers a diverse range of products, including Indian Single Stock and Index Derivatives, Currency Derivatives, Depository Receipts, and Global Stocks. ADVERTISEMENT It also facilitates listings of equity shares, SPACs, REITs, InvITs, and ESG-linked debt securities under IFSCA's regulatory IX and GIFT Nifty have secured key regulatory clearances including CFTC's Part 30 exemption and SEC Class Relief, allowing US-based investors to participate in derivative contracts on the platform. ADVERTISEMENT Also Read: Ola Electric, Kalyan Jewellers among 10 firms where promoters pledge increased in Q4 (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) ADVERTISEMENT
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Business Standard
02-05-2025
- Business
- Business Standard
Sebi relaxes norms for brokers to expand in Gift City, nixes separate NOC
Markets regulator Sebi on Friday allowed stock brokers to operate in the International Financial Services Centre (IFSC) at GIFT City, without taking its prior approval. Stock brokers proposing to undertake securities market related activities in GIFT-IFSC are permitted to do so under a separate business unit (SBU) of the stock broking entity itself. These activities can also be carried out if the branch qualifies as an SBU, Sebi said in its circular. Moreover, the existing practice of carrying out securities market-related activities in GIFT-IFSC through a subsidiary is also allowed. Thus, the form in which these activities are to be carried out is at the discretion of the entity. The matters related to policy, eligibility criteria, risk management, investor grievances, inspection, enforcement, claims for SBU in GIFT-IFSC would be specified under the regulatory framework issued by the regulatory authority concerned and all activities of the SBU in GIFT-IFSC would be under the jurisdiction of that regulatory authority. Further, Sebi asked brokers to ensure that securities market-related activities of the SBU in GIFT-IFSC are segregated from the Indian securities market-related activities of the stock broker. Such SBU in GIFT-IFSC will be exclusively engaged in providing securities market-related activities as permitted by the IFSCA. Further, the activities to be carried out by the SBU will be as permitted by the IFSCA. Stock brokers are required to prepare and maintain a separate account for the SBU on arms-length basis. Sebi said the net worth of the SBU will be kept segregated from the net worth of the stock broker in the Indian securities market. The net worth for the purpose of the SBU will be as per regulatory framework issued by the regulatory authority concerned. Stock brokers who have already floated subsidiary or entered into joint venture to undertake securities market related activities in GIFT-IFSC after obtaining approval from Sebi, will have an option to dismantle at its discretion, such subsidiary or joint venture and carry out such services under an SBU of the stock broking entity itself.
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Business Standard
02-05-2025
- Business
- Business Standard
IFSCA, NISM collaborate to advance capacity building in financial sector
The International Financial Services Centres Authority (IFSCA) and the National Institute of Securities Markets (NISM) on Friday inked a pact to advance capacity building in the financial sector. As part of the agreement, NISM will act as a training partner for IFSCA and the various intermediaries registered with IFSCA, the markets regulator Sebi said in a statement. Also, NISM, a public trust established by Sebi, will conduct relevant certification examinations, including certification examinations mandated under the IFSCA Regulations, for the intermediaries registered with IFSCA. These skill development, professional training and certification programmes will ensure that the highest professional standards are maintained in the IFSCA ecosystem. "With a proven track record of over a decade, NISM is uniquely positioned to support the needs arising out of the burgeoning growth being seen at IFSCA," the regulator said. This Memorandum of Understanding (MOU) will be mutually beneficial to both entities as IFSCA will be able to leverage NISM's capacity building and certification expertise and NISM will benefit from the learnings arising out of servicing an international financial platform. The MOU was signed in presence of Sebi chairman Tuhin Kanta Pandey and IFSCA chairman Kalyanaraman Rajaraman.
