GIFT City Opens Doors to Outbound Investing for Indian Residents

GIFT City, India’s premier International Financial Services Centre (IFSC), has largely been a destination for inbound fund flows—catering to Non-Resident Indians (NRIs) and foreign investors. Until now, resident Indian investors had minimal access to global markets through this channel. That is about to change.

Mirae Asset Mutual Fund has announced plans to launch an outbound fund, marking a pivotal moment that expands GIFT City’s utility. This development offers a structured, regulated route for Indian investors to diversify their portfolios internationally.

Why This Matters for Indian Investors

Indian investors, as noted by Vaibhav Shah, Head of Products, Business Strategy & International Business at Mirae Asset Investment Managers (India), tend to be heavily exposed to domestic equities. This lack of diversification has led to sharper losses during recent market corrections.

Adding international exposure through global assets introduces geographical diversification, potentially leading to better risk-adjusted returns. By investing in sectors and themes unavailable in India—such as artificial intelligence, semiconductors, electric vehicles, and blockchain—investors can expand their horizons beyond the Indian markets.

Global Themes That Dominate Outside India

Many high-growth sectors and technologies are gaining traction globally but remain underrepresented or inaccessible within Indian markets. Examples include:

• Artificial Intelligence (AI)

• Semiconductors and advanced chipmaking

• Electric Vehicles (EVs)

• Blockchain technology

The US, which represents 25% of global GDP and 50% of global market capitalisation, has significantly outperformed Indian markets over the past 15 years—by around 5–6% in dollar terms.

Addressing Current Constraints in Global Investing

At present, Indian mutual funds have nearly exhausted their $7 billion overseas investment quota. The $1 billion sub-limit for ETFs is also almost fully utilised. As such, Mirae Asset’s outbound fund provides a new gateway for investors who have otherwise been locked out of international opportunities.

Simpler and More Efficient Route Through GIFT City

Indian investors can theoretically invest globally through three channels:

1. Direct purchase of global stocks or ETFs

2. Using offshore brokers

3. Investing via funds through the Liberalised Remittance Scheme (LRS)

However, the first two routes are complicated by high transaction costs, taxation, custody fees, and the complexity of selecting the right investments. The third—investing through GIFT City-based funds—offers a more streamlined experience. These AIFs offer:

• Professional fund management

• Dynamic asset allocation

• Lower operational hurdles

• Tax efficiency (flat 12.5%)

Mirae Asset Global Allocation Fund: Structure and Strategy

The outbound fund, Mirae Asset Global Allocation Fund, will be structured as a Category-III Alternative Investment Fund (AIF) under the IFSCA regulations. Here are its key features:

• Close-ended fund with a 3-year lock-in (plus an optional 2-year extension)

• Open to resident Indians, NRIs, foreign nationals, institutions, family offices, and corporates

• Minimum investment of $151,000 (general) and $10,000 (accredited investors)

• Subscription window of approximately one year

Investment Strategy: Core and Tactical Allocation

The fund’s asset allocation will follow a dual strategy:

• Core Allocation (50–70%)
  Primarily invested in developed markets, especially the US
  • Exposure through global ETFs

  • Focus on broad market indices

• Tactical Allocation (30–50%)
  Targeting emerging markets such as China, Taiwan, and Brazil
  • Thematic investing in high-growth sectors like AI and EVs

Tax Efficiency and Currency Considerations

Aside from diversification, another advantage of investing through GIFT City is tax efficiency. The 12.5% tax rate applicable to international investments through GIFT-based AIFs is relatively competitive. Currency depreciation also adds a potential hedge—over time, depreciation of the rupee can enhance returns when repatriated from stronger foreign currencies.

Conclusion

The launch of an outbound AIF by Mirae Asset marks a turning point in the evolution of GIFT City. It is no longer just a vehicle for attracting foreign capital but is now beginning to enable resident Indians to participate in global wealth creation opportunities. Through a structured and simplified approach, this initiative provides investors with regulated access to global markets—broadening the horizon for portfolio diversification and long-term wealth management.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.