If you have been looking for a legal way to invest outside India without opening a foreign investment account, you may have come across GIFT City.
GIFT City has become an important part of India’s global investment landscape. Mutual funds are one reason for this growth.
This guide explains what GIFT City mutual funds are, who can invest in them, how they work, what options are available and what you need to consider before investing.
What Are GIFT City Mutual Funds?
GIFT City stands for Gujarat International Finance Tec-City. It is located between Ahmedabad and Gandhinagar in Gujarat. Within GIFT City is a special financial zone called the IFSC.
GIFT City is in India, but its IFSC is designed to operate as an international financial centre. The IFSC has its own regulatory framework. The IFSCA oversees financial products and services operating within this zone.
A GIFT City mutual fund is a mutual fund set up within the International Financial Services Centre (IFSC) at GIFT City. These funds are regulated by the International Financial Services Centres Authority (IFSCA).
Almost all GIFT City funds are denominated in US dollars. Depending on the fund, the money can be invested in global markets or Indian markets.
That structure makes GIFT City funds different from the mutual funds you normally buy in India.
Also Read – A comprehensive guide to mutual funds in India
How are GIFT City funds different from domestic Mutual Funds?
One term you will come across often is a feeder fund. A feeder fund collects your money and invests it into another fund, known as the master fund. The master fund then makes the actual investments.
Several GIFT City funds use this structure. Here is how a GIFT City mutual fund compares with a typical domestic international feeder fund:
Feature | GIFT City mutual fund | Domestic international feeder fund |
Regulator | IFSCA | SEBI |
Currency | US dollars | Indian rupees |
How you invest | Residents remit dollars under LRS; NRIs use NRE, NRO or foreign accounts | Normal rupee investment |
Investments | Global or Indian markets, depending on the fund | Foreign fund or global assets |
Overseas investment cap | Outside SEBI’s overseas investment cap | Subject to the cap |
Suited to | Those looking for USD exposure and global options | Those comfortable investing in rupees |
The difference is important because domestic mutual funds investing overseas are subject to limits on how much they can invest abroad. GIFT City funds operate under the IFSC framework and sit outside this particular SEBI limit.
The Regulator: IFSCA in Brief
IFSCA was created to regulate financial services within the IFSC under one framework. For you, this means that GIFT City funds have a specific regulator and regulatory framework.
A fund house operating in GIFT City is known as a Fund Management Entity, or FME. It is broadly the GIFT City equivalent of an asset management company in the domestic mutual fund industry.
The sector has also grown quickly. The number of FMEs registered with IFSCA increased from 202 to 217 between December 2025 and March 2026. Registered fund schemes increased from 327 to 360 during the same period.
Total commitments were close to USD 20 billion by March 2026, according to IFSCA data reported by Café Mutual. Most of this money still comes from institutions. The bigger change, however, is the growing participation from individuals.
Also Read – Top GIFT City investment products
Why are GIFT City Mutual Funds getting attention in 2026?
There are two main reasons.
First, participation from individuals has increased sharply.
The number of individuals in GIFT City retail fund schemes almost tripled during the January to March 2026 quarter. It increased from 1,239 to 3,438, based on IFSCA data reported by Outlook Money.
Second, investing overseas through domestic mutual funds has become more difficult.
SEBI has an industry-wide limit of around USD 7 billion for overseas investments by domestic mutual funds. As fund houses reached these limits, several international funds stopped accepting fresh investments.
GIFT City funds are outside this particular limit. This has allowed new international investment options to continue emerging even as some domestic overseas funds faced restrictions.
For years, a resident Indian looking for global exposure had limited options. You could wait for a domestic international fund to reopen or use an overseas investment account.
GIFT City provides another route but the route itself should not be the reason to invest. The more important question is whether global exposure belongs in your financial plan in the first place.
Anuj says: For years, a resident Indian looking for global exposure had two choices: wait for a domestic international fund to reopen or use an overseas investment account. GIFT City has created another route. But the route is the easy part. The real question is whether global exposure belongs in your financial plan.
Key benefits of GIFT City Global Mutual Funds
GIFT City funds have some genuine advantages.
Dollar Exposure
You invest in a dollar-denominated fund and the value of your investment is also tracked in dollars.
This can be useful when you have future expenses in US dollars.
For example, if you are saving for your child’s education in the US eight years from now.
Your income and savings may be in rupees, but the future education expense will be in dollars.
A dollar-denominated investment can give part of your savings exposure to the same currency as the future expense.
If the rupee weakens against the dollar, your dollar-denominated investment may provide some protection against the higher rupee cost of that future expense.
However, if the Rupee appreciates against the US dollar then it can also go the other way around. This could be even more impactful if your child studies in India only. So, also keep that in mind.
Global Diversification
GIFT City can give you access to global markets without requiring you to open and maintain a separate overseas brokerage account.
You can get exposure to markets such as the US, UK, China, Japan, Taiwan, South Korea and other international markets depending on the fund.
If you want to understand how mutual funds work before looking at these options, our comprehensive guide to mutual funds in India covers the basics.
A Simpler Structure
A GIFT City mutual fund can provide a simpler structure if you are looking for international exposure. It gives Indian investors a regulated investment route from within India, without having to set up or maintain an overseas structure in places such as Singapore or Mauritius.
You can invest in eligible global assets through funds based in GIFT City, while dealing with an Indian financial ecosystem and regulations designed specifically for international investments.
In comparison, the Singapore or Mauritius route may involve setting up or using an offshore entity, additional paperwork, foreign exchange processes, and potentially higher compliance and administrative costs.
So, GIFT City tries to give you many of the advantages of an international investment centre without making you manage a separate overseas structure.
Indian Fund Managers with global mandates
Some fund houses that you may already know from India have established operations in GIFT City. This gives you access to international investment strategies through fund management entities operating within the IFSC.
A Regulated Framework
GIFT City is a formal route to investing overseas. Funds operating within the IFSC are regulated by IFSCA. IFSCA is the single unified regulator for all financial products available in the GIFT City.
Types of Mutual Funds available in GIFT City
There are two useful ways to understand the options.
The first is by where the money goes.
Outbound funds take money from India and invest in global markets. These are relevant to everyone including resident Indians, NRI, OCIs, PIOs, and even foreign nationals.
Inbound funds bring foreign money into Indian markets. These are relevant for NRIs, OCIs, PIOs, and foreign nationals who want to participate in India’s growth story.
The second way is by investment style.
An active fund has a manager who selects investments with the aim of doing better than a benchmark.
A passive fund tracks an index such as the S&P 500 or Nasdaq 100.
Active GIFT City fund | Passive GIFT City fund | |
What it does | Manager selects investments | Tracks an index |
Cost | Usually higher | Usually lower |
What you are paying for | Manager’s investment decisions | Low-cost index exposure |
Suited to | Those comfortable with active management | Those looking for simple index exposure |
There is no universal answer on which is better. It depends on your suitability.
If you want a manager to make investment decisions and are comfortable paying more for that approach, an active fund may suit you.
If you mainly want exposure to a particular global index at a lower cost, a passive fund may be easier to understand.
Mutual Fund Companies in GIFT City: Current Options
The retail GIFT City mutual fund market is still relatively small, but it is growing. As of mid-2026, some of the outbound options include:
Fund house | Fund | Type | Main exposure |
PPFAS (Parag Parikh) | S&P 500 Fund of Fund | Passive | US large-cap index |
PPFAS (Parag Parikh) | Nasdaq 100 Fund of Fund | Passive | US technology-heavy index |
DSP | Global Equity Fund | Active | Global equities |
Marcellus | Global Equities Fund | Active | Global equities |
Edelweiss | Greater China Equity Fund | Active | Greater China equities |
Two HDFC funds are set to join the list from late August.
There are also inbound schemes aimed at NRIs and overseas participants who want Indian market exposure in dollars.
Many of these use a feeder structure. The GIFT City fund invests into an existing Indian mutual fund, giving you access to the underlying portfolio through the IFSC.
Tata Asset Management launched one such India-focused scheme in September 2025, and other fund houses have also added inbound options.
What is the track record of GIFT City Mutual Funds?
GIFT City retail mutual funds are still a young category. Many of the schemes were launched only in 2025 or 2026.
That means there is no long-term track record for most of the funds operating through the GIFT City.
However, there is still a way to track their performance. Most of the GIFT City funds available today replicate the performance of an underlying fund or an index that already have a track record.
For passive funds, one useful measure is how closely the fund follows its underlying index.
For example, if a fund tracks the S&P 500, you would want to see how closely its performance matches the index after accounting for costs.
The difference between the fund’s performance and its index is known as tracking difference. The lesser the tracking error, the more closely the GIFT City fund could replicate the performance.
For active funds, most funds available today have their underlying funds that have several decades of performance track record in India. So, it is easy to check the track record of the underlying Indian fund from the public domain.
Who can invest in GIFT City Mutual Funds?
Both resident Indians and NRIs can invest in GIFT City funds, but the route is different.
If you are a Resident Indian, you can only invest in outbound funds and send money under the RBI’s Liberalised Remittance Scheme, or LRS.
The LRS allows a resident individual to remit up to USD 250,000 per financial year.
If you are an NRI, OCI, PIO, or a foreign national can invest in both inbound and outbound funds and can invest through NRE, NRO or foreign bank accounts.
Resident Indian | NRI/ OCI/ PIO/ Foreign National | |
Funds generally used | Outbound global funds | Inbound India-focused funds |
How money moves | LRS remittance | NRE, NRO or foreign account |
Basic requirements | PAN and KYC through an IFSC-registered intermediary | KYC through the IFSC intermediary |
Important point | LRS limits and applicable TCS need to be considered | Home-country tax and investment rules need to be checked |
NRIs in the US and Canada may face additional restrictions.
Some fund houses do not accept applications from these countries because of the regulatory requirements in their home jurisdictions, such as the US PFIC reporting
If you are an NRI, your country of residence matters. Our detailed guide to GIFT City investments for NRIs covers this side in more detail.
Minimum investment in GIFT City Mutual Funds
There is no single minimum investment amount for all GIFT City mutual funds. Each fund decides its own minimum.
As a rough indication, some outbound funds in 2026 have minimums around USD 5,000, while some inbound schemes have started at around USD 500.
How to invest in GIFT City Mutual Funds
The process itself is fairly straightforward.
1. Complete your KYC
Complete the required KYC with an IFSC-registered intermediary or the fund house’s GIFT City unit.
2. Move the money through the correct route
If you are a resident Indian, the money generally needs to be remitted under the LRS. If you are an NRI, the fund can generally be funded through an NRE, NRO or foreign account, depending on the scheme.
3. Choose the fund
Look at whether you need an outbound or inbound fund. Then look at the investment strategy. Read the fund’s Key Information Memorandum before investing.
4. Invest at the applicable NAV
Units are allotted based on the applicable NAV, or net asset value, of the fund.
5. Review it as part of your overall plan
Once you invest, the fund should not be looked at in isolation. Review how it fits with your other investments, your goals and your overall asset allocation.
Also Read – A detailed guide on GIFT City investments for NRIs
Tax treatment and key risks
Tax treatment can become complicated because the rules are different for residents and NRIs.
The following is a high-level overview.
Resident Indians | NRI/ OCIs/ PIOs/ Foreign Nationals | |
On the way in | 20% TCS on LRS remittances above ₹10 lakh in a year, subject to applicable rules | No LRS or TCS on the investment route |
On gains | Gains are taxable in India as foreign income and need to be reported | Income from eligible IFSC fund units can be exempt from Indian tax under Section 10(4D) |
Important point | TCS is generally available as tax credit when you file your return | Your country of residence may still tax the income |
For residents, the 20% TCS on applicable LRS remittances above ₹10 lakh is a cash-flow consideration. It is not necessarily a permanent tax cost because the amount can generally be claimed as credit while filing your income tax return.
For NRIs, Section 10(4D) can provide an Indian tax exemption for eligible IFSC fund units.
But this exemption is specific to eligible units. It does not automatically apply to every investment available in GIFT City.
Your country of residence can also have its own tax rules.
For example, a US-based NRI may still have US reporting and tax requirements. A UK-based NRI may have UK tax implications.
This is where a Double Taxation Avoidance Agreement, or DTAA, may become relevant.
If you are dealing with cross-border taxation, check your specific position with a qualified tax professional or chartered accountant.
You can also read ClearTax’s guide to GIFT City tax benefits for an overview of the tax framework.
Key risks to understand
There are two risks worth keeping in mind.
Currency risk: Currency movements can work both ways. A weaker rupee can help the rupee value of dollar investments, while a stronger rupee can reduce it.
Regulatory changes: The IFSC framework is still developing. Regulations can be updated as the market grows. Though, most regulations have been in investor’s interest only.
How can Zenith Finserve help you invest in GIFT City Mutual Funds?
Investing in a GIFT City fund is relatively straightforward. The real question is whether it suits your overall situation.
At Zenith Finserve, we start with that question rather than with a financial product. We look at whether global and dollar-denominated exposure actually suits your goals.
For a resident Indian, that can include looking at your LRS limit and how much international exposure makes sense alongside your existing investments.
For an NRI, there can be additional questions around the source of funds, the country where you live and the applicable tax rules.
We already have the product research ready. Once we know your suitability, we simply match the product to your suitability and then review it on an ongoing basis.
You can learn more about our GIFT City investment services and how we approach goal-based financial planning.
Anuj says: The clients who benefit from GIFT City funds are not the ones investing because the category is growing. They are the ones who understand what role it plays in their plan. My job is to tell you when it fits, and just as importantly, when it does not.
Conclusion
GIFT City mutual funds give you another route to global diversification through a regulated financial centre in India.
For resident Indians, they can provide access to global markets in dollars through the IFSC framework.
For NRIs, OCIs, PIOs, and foreign nationals, GIFT City also provides dollar-denominated routes to Indian market exposure.
The process to invest is simple, and taxation is favourable. To find out your suitability, you need to start with your goal, understand the role global exposure needs to play and then invest in suitable products.
FAQs
What is a GIFT City mutual fund and how is it different from a regular mutual fund?
A GIFT City mutual fund is set up within the IFSC and regulated by IFSCA rather than SEBI. These funds are generally denominated in US dollars. Regular Indian mutual funds are regulated by SEBI and are generally denominated in rupees.
Can resident Indians invest in GIFT City mutual funds?
Yes. Resident Indians can invest in eligible outbound GIFT City funds by remitting money under the RBI’s Liberalised Remittance Scheme. The LRS limit is USD 250,000 per financial year, subject to applicable rules.
Can NRIs invest in GIFT City mutual funds?
Yes. NRIs and OCIs can generally invest in eligible inbound funds using an NRE, NRO or foreign bank account. However, availability can depend on the country where you live. NRIs in the US and Canada may face additional restrictions.
What is the minimum investment amount for GIFT City mutual funds?
There is no common minimum. It depends on the specific fund. Some outbound funds in 2026 have minimums around USD 5,000, while some inbound schemes have started around USD 500. Check the fund’s Key Information Memorandum for the current amount.
Which mutual fund companies currently offer schemes in GIFT City?
Some of the current outbound options include PPFAS, DSP, Marcellus and Edelweiss. Inbound India-focused schemes are also available from fund houses such as Tata and others. The list can change, so check the current IFSCA information before investing.
How have GIFT City mutual funds performed so far?
The category is still young, so most schemes do not have a long track record. For passive funds, look at how closely they track their underlying index. For active funds, a longer record is needed to judge performance against a suitable benchmark.
How do I invest in a GIFT City mutual fund?
Complete KYC with the relevant IFSC intermediary or fund house, move the money through the applicable route, choose the fund, read its scheme documents and subscribe at the applicable NAV. After that, review it as part of your overall financial plan.
