Gujarat International Finance Tec-City (GIFT City) India

India’s ambition to emerge as a global financial hub has taken a major step forward with the establishment of the Gujarat International Finance Tec-City (GIFT City) – India’s first International Financial Services Centre (IFSC). Governed by the International Financial Services Centres Authority (IFSCA), GIFT City is a world-class ecosystem for financial services, offering regulatory clarity, tax benefits, and infrastructure at par with global standards.

One of the most attractive opportunities in GIFT City is the Alternative Investment Fund (AIF) registration. For fund managers and investors, setting up an AIF in GIFT City opens doors to international capital flows, global investors, and a favorable business environment backed by streamlined regulations.

What is an AIF?

An Alternative Investment Fund (AIF) is a privately pooled investment vehicle that collects money from investors to invest in assets as per a defined strategy. Unlike traditional mutual funds, AIFs cater to sophisticated investors by investing in private equity, venture capital, hedge funds, infrastructure funds, real estate, and other alternative assets.

AIFs are broadly classified into:

1. Category I AIFs – Venture capital, angel funds, SME funds, infrastructure funds.

2. Category II AIFs – Private equity funds, debt funds, distressed asset funds.

3. Category III AIFs – Hedge funds, complex trading strategies, derivatives.

Why GIFT City for AIFs?

Setting up an AIF in GIFT City IFSC offers multiple benefits:

• Tax Incentives: Significant tax exemptions on income from offshore investors and investments.

• Regulatory Simplification: IFSCA provides a single-window clearance system.

• Global Access: Opportunity to raise capital from foreign investors without restrictions applicable in onshore India.

• Ease of Operations: International banking, liberal forex regulations, and global-standard infrastructure.

• Investor Confidence: GIFT City operates under a transparent regulatory framework, enhancing credibility.

Eligibility for AIF Registration in GIFT City

To establish an AIF in GIFT City, applicants must meet IFSCA’s eligibility conditions:

• Must be set up as a company, LLP, or trust.

• The sponsor/manager must demonstrate professional competence, track record, and fit & proper criteria.

• Minimum corpus requirements as per category:

  • Category I & II AIFs – USD 3 million.

  • Category III AIFs – USD 6 million.

• Minimum investment per investor – USD 150,000 (except employees/directors, where it can be lower).

• Appointment of a custodian for safekeeping of assets (mandatory for Category III AIFs).

Registration Process of AIF in GIFT City

1. Application Preparation:

   • Draft placement memorandum, trust deed/LLP agreement, details of sponsor, manager, and investment strategy.

2. Submission to IFSCA:

   • Apply in the prescribed form along with fees and supporting documents.

3. Scrutiny by IFSCA:

   • Evaluation of eligibility, track record, net worth, and compliance capability.

4. Approval & Registration Certificate:

   • Upon satisfaction, IFSCA issues the Certificate of Registration, authorizing the fund to operate as an AIF in GIFT City.

Documentation Required

• Constitutional documents (MOA, AOA, Trust Deed, LLP Agreement).

• Details of fund manager, sponsor, directors, and key personnel.

• Financial statements and net worth certificates.

• Investment strategy and fund structure.

• Risk management framework.

• Compliance policies and governance structure.

Post-Registration Compliances

Operating an AIF in GIFT City requires strict compliance under IFSCA regulations, including:

• Quarterly and annual reports to IFSCA.

• Investor disclosure on risks, portfolio valuation, and returns.

• Appointment of an independent auditor.

• Adherence to leverage limits and investment restrictions.

• Maintaining investor grievance redressal systems.

Tax Advantages for AIFs in GIFT City

One of the biggest attractions of GIFT City is its tax regime:

• Exemption from income tax on specific incomes for 10 consecutive years out of 15.

• No securities transaction tax (STT), commodity transaction tax (CTT), or stamp duty on transactions carried out in IFSC.

• Exemption from capital gains tax on certain transactions involving non-residents.

• Tax neutrality for Category I and II AIFs similar to onshore AIFs.

This favorable tax environment makes GIFT City a strong competitor to international hubs like Singapore and Dubai.

Benefits of Registering AIF in GIFT City

1. Global Reach: Access to both Indian and foreign investors.

2. Operational Flexibility: Liberalized currency controls and easier capital movement.

3. Lower Costs: Tax holidays and reduced regulatory burdens.

4. Reputation: Association with India’s premier international finance hub.

5. Innovation: Scope for new fund structures, derivatives, and global asset classes.

Challenges for AIFs in GIFT City

• High entry barriers with significant minimum corpus requirements.

• Intense documentation and scrutiny by IFSCA.

• Need for professional fund managers with proven track records.

• Continuous compliance and reporting requirements.

Despite these challenges, the long-term advantages far outweigh the initial hurdles, making GIFT City a strategic choice for fund managers.

Future of AIFs in GIFT City

The IFSCA is actively promoting GIFT City as India’s financial powerhouse, attracting global funds, foreign banks, and fintech players. With increasing investor appetite for alternative assets and India’s growth story, AIFs in GIFT City are expected to grow exponentially in the coming years.

From venture capital and private equity to hedge funds and infrastructure financing, the platform provides limitless opportunities for domestic and foreign investors.

Conclusion

Registering an Alternative Investment Fund (AIF) in GIFT City under IFSCA is a game-changing opportunity for fund managers and investors. With global-standard regulations, lucrative tax benefits, and access to international markets, GIFT City is positioning itself as the next big financial hub.

At Corpzo, we specialize in end-to-end AIF Registration in GIFT City, including advisory, documentation, compliance, trustee/custodian setup, and regulatory approvals. Our expertise ensures a smooth and compliant process so you can focus on fund growth and investor relations.

👉 Consult Corpzo today to explore AIF registration opportunities in GIFT City (IFSCA).

Visit us at www.corpzo.com