GIFT City for NRIs: How to invest in India in dollars without rupee conversion

GIFT City enables NRIs and OCIs to invest in India through an International Financial Services Centre (IFSC). Investments are made in US Dollars (USD), eliminating the need to convert money into Indian Rupees. However, investors should keep in mind the Liberalised Remittance Scheme (LRS) limit of $250,000 per financial year, which is cumulative across investments, travel, education, gifts and other eligible remittances.

According to Niteen Dongare, Director & CEO, Anand Rathi International Ventures IFSC Pvt Ltd, GIFT City offers access to mutual funds, Alternative Investment Funds (AIFs), global stocks, ETFs and GIFT Nifty in a regulated environment under the IFSCA. Investors also benefit from no Securities Transaction Tax (STT), Commodities Transaction Tax (CTT), GST on transactions, stamp duty or exchange turnover charges on eligible products.

According to Ankur Choudhary, CEO & Co-Founder, Belong, investors can repatriate both capital and investment returns without limits. They can invest from and withdraw funds to an overseas bank account or an NRE/NRO account, making the investment process more convenient than some domestic investment options.

While GIFT City offers several investment avenues, India-focused Portfolio Management Services (PMS) is currently not available. According to Viram Shah, Founder & CEO, Vested Finance, reports about the PMS minimum investment limit getting reduced to USD 75,000 do not apply to India-focused strategies, as inbound PMS offerings are not yet available in GIFT City.

The investment process involves:
● Opening an IFSC account
● Completing KYC with passport, PAN, overseas address proof and NRI/OCI documents
● Funding the account directly in foreign currency
● Selecting suitable investment products based on risk profile
● Repatriating returns in foreign currency after completing applicable compliance requirements

According to Viram Shah, NRIs redeeming Indian mutual funds through the domestic route may face TDS deductions and may need to submit a Tax Residency Certificate and Form 10F to claim treaty benefits. If these are not submitted in time, investors may have to claim a refund by filing an Indian tax return. In contrast, with an inbound Fund of Funds (FoF) in GIFT City, there is no TDS on withdrawal, allowing investors to receive redemption proceeds directly in US dollars.

GIFT City offers NRIs and OCIs a platform to invest in India in US dollars, access multiple investment products under an IFSCA-regulated framework, enjoy lower transaction costs, and repatriate funds without limits. Investors should, however, consider the LRS limit and choose products that align with their investment objectives and risk appetite.