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Mint
7 days ago
- Business
- Mint
Accreditation is your hack into GIFT City AIFs
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.
Fashion Value Chain
04-08-2025
- Business
- Fashion Value Chain
IVCA CAT III Summit 2025 to Spotlight Innovation, Growth, and Alpha in India's Fastest-Growing Alternate Asset Class
The Indian Venture and Alternate Capital Association (IVCA), India's apex industry body for alternative assets, is set to host the IVCA CAT III Summit 2025 in Mumbai on 6th August 2025. As Category III AIFs emerge as a driving force in India's capital markets, this year's summit will convene over 120 industry leaders-ranging from fund managers and limited partners to policymakers and wealth advisors-for a deep dive into the strategies, structures, and shifts shaping this dynamic asset class. IVCA CAT III Summit 2025 to Spotlight Innovation, Growth, and Alpha in India's Fastest-Growing Alternate Asset Class The summit comes at a time when Category III AIFs have recorded a 65% compound annual growth rate (CAGR) over the past three years, with RS. 2.3 lakh crore in capital commitments across 371 registered funds. In FY25 alone, 95 new Category III AIFs were launched, marking an 86% year-on-year surge in fund registrations. The segment's 58% YoY jump in capital commitments has significantly outpaced the broader AIF industry growth rate of 19%, reflecting growing investor appetite for structured alpha and alternative strategies. Rajat Tandon, President of IVCA, said, 'Category III AIFs are at the forefront of India's financial evolution-bridging strategic growth with institutional capital and enabling investors to tap into sophisticated, high-conviction strategies. As a platform, IVCA is committed to driving meaningful dialogue with all stakeholders-fund managers, regulators, and allocators-to build a more agile and future-ready investment ecosystem. The CAT III Summit is a step forward in unlocking the true potential of this asset class.' The summit will feature marquee voices from both the policy and investment community. Shri Pradeep Ramakrishnan of the International Financial Services Centres Authority (IFSCA) and Shri Pavan Shah will headline the regulatory discussions, alongside prominent fund managers such as Bhautik Ambani (AlphGrep Investment Management), Siddharth Bhaiya (Aequitas Investments), Prashant Jain (3P), Vikas Khemani (Carnelian Asset Advisors), Dr. Pritesh Majumdar (DSP Mutual Fund), Vikaas Sachdeva (IVCA CAT III Council Co-Chair), and Onkarpreet Singh Jutia (Nuvama Private), among others. Dr. Pritesh Majmudar, Head- Legal & Compliance and Compliance Officer, DSP Asset Managers Private Limited said, 'Indian equity markets have displayed sharp dispersion of returns within sectors over time. Such dispersion opportunities can be captured by long/short equity funds, while keeping net market exposure to a minimum. These strategies can deliver strong risk-adjusted returns, and also offer a diversification element to the overall portfolio. In collaboration with IVCA, we aim to deepen industry engagement and promote best practices in alternative investments. This partnership will help elevate awareness among institutional investors and foster a more robust ecosystem for equity-based alternatives.' Priyam Kedia, Senior Portfolio Manager at Vivriti Asset Management, added, 'Indian credit funds predominantly operate as a close-ended Category II fund with a 4-5-year investment horizon. Global investors have access to credit funds providing periodic liquidity and exit options under a semi-liquid strategy. The semi-liquid credit fund is a new asset class, within the ambit of CAT III regulations, introduced by Vivriti AMC to Indian investors. I am looking forward to participating in the IVCA Summit to introduce semi-liquid credit funds as an asset class, broadening the array of diversified debt products.' In a statement ahead of the event, Udit Sureka, EVP and Head of Products at Nuvama Asset Services, remarked, 'Category III AIFs are redefining the future of alpha in India's alternatives landscape-offering investors uncorrelated, risk-adjusted returns that go beyond traditional market benchmarks. As the only vehicle that spans derivatives, quant strategies and private & public market investments, CAT III funds enable a multi-asset, market-agnostic approach to portfolio construction. For discerning investors, this isn't just about diversification-it's about accessing performance built on strategy, speed, and institutional discipline. While clarity on leverage norms and taxation will unlock further growth, the CAT III ecosystem is already leading the way in innovation-led investing.' The partners for the summit include 3P, DSP, and Vivriti Asset Management. Nuvama joins as the Custody and Clearing Partner, lending strong institutional backing to the event. As Category III strategies gain wider acceptance among domestic and global investors, the IVCA CAT III Summit 2025 promises to be a timely platform for industry leaders to decode key trends, navigate regulatory developments, and craft a forward-looking roadmap for the ecosystem. About IVCA The Indian Venture and Alternate Capital (IVCA) is a not-for-profit, apex industry body promoting the alternate capital industry and fostering a vibrant investing ecosystem in India. IVCA is committed to supporting the ecosystem by facilitating advocacy discussions with the government of India, policymakers, and regulators, resulting in the rise of entrepreneurial activity, innovation, and job creation in India and contributing towards the development of India as a leading fund management hub. IVCA represents 450+ funds with a combined AUM of over $350 billion. Our members are the most active domestic and global VCs, PEs, funds for infrastructure, real estate, credit funds, limited partners, investment companies, family offices, corporate VCs, and knowledge partners. These funds invest in emerging companies, venture growth, buyout, special situations, distressed assets, and credit and venture debt, among others.
Mint
22-07-2025
- Business
- Mint
Investing abroad: Here are the pros and cons of using old and new routes
Investing in overseas markets is important for diversifying one's portfolio. But over the years, there have been restrictions in traditional modes of investing, such as mutual funds, while new investing avenues have opened up in Gift City. There are multiple ways to invest abroad, and with deepening of markets, more avenues are becoming available. Here is a look at the advantages and disadvantages of both old and new avenues, and different investor profiles. Direct purchase of stocks There are broking firms, either multinational firms or Indian entities with tie-ups with broking firms abroad, who facilitate the execution. Your investment in stocks or bonds abroad is subject to liberalized remittance scheme (LRS) limit of $250,000 per financial year. At a conversion rate of 86 per dollar, it is ₹2.15 crore per financial year. Provided you do not have any other requirement for money abroad, children's education, or travel, you can utilise this limit. However, one issue here is stock selection. If you are in a different profession, then analysing stocks, that too foreign stocks, is not your forte. There are entities in India that offer a curated basket of stocks which you can purchase, and they will facilitate the transaction through a broking entity with which they have a tie-up. However, they do not have accountability for the performance of those stocks. You require guidance on picking stocks abroad. Otherwise, it is not advisable to venture into it. Managed vehicles - mutual funds Through the mutual fund route, you not only get the advantage of a professional fund management team managing the portfolio, but also the fact that it is not part of the LRS limit. The issue of the MF route is entirely different. There are RBI limits for the MF industry, of $7 billion for investment abroad and another $1 billion for investments in ETFs abroad. The limits became almost full, and MFs had to stop accepting fresh subscriptions. However, certain MFs investing abroad do accept money from time to time. There are redemptions, which open up scope for accepting fresh money. Hence, you can go through the MF route. You get the advantage of a fund manager managing your money, or a passive fund following an index abroad, where you can avoid the fund manager risk (risk of the fund manager underperforming a benchmark index). GIFT City options There is another avenue in MFs: recently, a fund has been launched under the IFSCA (International Financial Services Centres Authority) jurisdiction at GIFT City. This is a different jurisdiction, not subject to the usual RBI or SEBI regulations. That is, it is not subject to the cap on investments abroad or $7 billion or $1 billion. This is a retail fund, with minimum subscription of $5,000 ( ₹430,000) at a conversion rate of 86. The term retail fund has a particular connotation: it is a particular fund structure under the IFSCA. This fund is subject to the LRS limit of $250,000 per year. The appeal of this structure is that at $5,000, the ticket size is relatively affordable. There are other outbound products available at GIFT City (other than mutual funds) where the ticket size is higher. Portfolio management services There are PMSs available at GIFT City, where you convert your money from your normal rupee bank account to dollar and remit to a bank housed at GIFT. The ticket size is usually $75,000, which is ₹64.5 lakh. Quantum could be lower if the service provider offers 'accredited investors". There is a professional fund manager to manage your portfolio. Money remitted to GIFT jurisdiction is part of the LRS limit of $250,000. Alternative Investment Funds There are fund management houses that have Alternative Investment Funds (AIFs) under IFSCA guidelines. The fund would be structured as something like 'A Restricted Scheme (Non-Retail) classified as a close-ended category III AIF under the IFSCA FM Regulations". A restricted scheme is one under a private placement offer to only accredited investors or investors investing above $150,000, and it shall have not more than 1,000 investors. Things to know about GIFT City route Similarly, when there is a redemption from investments abroad but the money stays within GIFT, there is no LRS implication. It can be remitted abroad later when Sen is a corporate trainer (financial markets) and author. Views are personal.
Mint
09-07-2025
- Business
- Mint
Retail funds in GIFT City: What investors must know about tax implications
A new global gateway has opened for Indian retail investors. A GIFT City-based subsidiary of an Indian mutual fund has launched the country's first open-ended retail fund under the International Financial Services Centres Authority (IFSCA) regulations. While this opens up a new route for Indian resident investors to access global equities, the absence of specific tax provisions for such funds makes it essential to understand how both the fund and its investors will be taxed under Indian law. The fund, which is neither a mutual fund nor an alternative investment fund (AIF), is structured as a trust and designed for resident Indians. Investors will contribute in US dollars via the Liberalised Remittance Scheme (LRS), remitting funds from their Indian bank accounts to the fund's GIFT City account. The fund will offer daily redemptions but impose a 1% exit fee for withdrawals within one year. Also read: GIFT City is changing how—and where—Indians invest TCS on LRS contributions Investors must route their contributions through the LRS window, which allows up to $250,000 annually. However, any remittance exceeding ₹10 lakh in a financial year will attract a 20% tax collected at source (TCS) on the excess. This TCS is aggregated across all LRS remittances and can later be claimed as tax credit in the investor's income tax return. Although GIFT City is treated as an overseas jurisdiction under exchange control rules (FEMA)—requiring investors to use their LRS limit—it is considered part of India for income tax purposes. As a result, both the Fund and its investors must comply with Indian tax regulations. Also read: New funds surge in GIFT City, but old money stays offshore How the Fund may be taxed Since the fund is structured as a trust with Indian tax residency, it does not qualify for tax exemptions that are extended to funds with only non-resident investors. Therefore, standard trust taxation rules apply. The taxation of trusts and their beneficiaries depends on whether the trust is classified as a specific (or determinate) trust or a discretionary (or indeterminate) trust. Under Indian tax law, tax is levied at only one level—either at the trust level or at the beneficiary level: In this case, the fund would likely qualify as a specific trust, since each investor's share in income and capital is known. However, an explanation under Indian tax law requires that such shares be explicitly specified in the trust deed as on the date of its creation. Citing this, tax authorities have often classified similar investment trusts as discretionary trusts, despite court rulings to the contrary. To avoid potential litigation, the fund may choose to classify itself as a discretionary trust. Tax rates and treatment As a discretionary trust, the fund will be taxed at the trust level at the maximum marginal rate. However, courts have ruled that special incomes like capital gains or dividends will still be taxed at their applicable preferential rates: Long-term capital gains: 12.5% + surcharge + cess = ~14.95% Dividends: 30% (with surcharge capped at 15%) = ~35.88% Interest and other income: taxed at the highest marginal rate For investors, any income distributed by the trust is tax-exempt, and hence not subject to TDS. However, unlike regular mutual funds where the net asset value (NAV) is calculated without accounting for tax impact, this fund must factor in potential tax liabilities while determining its NAV. Specifically, it must provision for taxes that would arise if the investments were sold at the current NAV. If this is not done, investors who exit before sale of investments by the Fund would not bear their share of the tax payable by the Fund. Also read: Global investing through GIFT City: What a keen investor should know about Need for clarity Since this retail fund format under IFSCA is new, there is no explicit taxation guidance under the Indian Income Tax Act. To avoid confusion and potential disputes, it may be prudent for the government to amend tax laws to provide clear, fund-specific rules. A well-defined tax framework would reduce ambiguity and boost investor confidence in GIFT City's evolving retail fund offerings. Gautam Nayak is a partner at CNK & Associates LLP. Views are personal.
Economic Times
25-06-2025
- Business
- Economic Times
IFSCA unveils framework for ESG-linked transition bonds at GIFT City
International Financial Services Centres Authority introduces a framework. This framework allows companies facing carbon emission reduction challenges to secure funds at Gift City. They can do this through Environment, Social, and Governance-linked bonds. The framework focuses on sectors like steel and aviation. It requires a credible transition plan and enhanced disclosures. Tired of too many ads? Remove Ads (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) The International Financial Services Centres Authority has issued a framework that will enable companies that face difficulty in reducing carbon emissions to raise funds at Gift City through Environment, Social and Governance (ESG)-linked unified regulator issued Tuesday a framework for issuance and listing of the so-called transitions bonds. 'The said framework will enable the issuers, specifically from hard-to-abate sectors , to raise capital and list their securities at GIFT IFSC, while committing to a credible transition plan and making enhanced disclosures to ensure the interests of the investors are protected,' it such as steel, cement, aviation are classified as hard-to-abate. Companies from these sectors particularly find it difficult to reduce carbon emission because of their heavy reliance on fossil fuels and processes that make decarbonization noted that ESG-labelled debt securities have played a key role in mobilizing climate finance . But it is generally seen that their application is often limited to sectors/projects that are at near/net zero. 'Transition finance provides a structured pathway for hard-to-abate industries to reduce their emissions progressively,' it framework has four important pillars. These are a credible transition plan at the entity level, alignment with globally recognized taxonomies and technology roadmaps, mechanism for independent external review, and disclosure week, infrastructure conglomerate Larsen & Toubro raised ESG-compliant bonds amounting to Rs500 crore for a term of three years. This is the first such bond issue under the Securities and Exchange of India's (Sebi) newly issued framework on ESG and sustainability-linked bonds
