Who Can Invest in GIFT City Mutual Funds: NRI's Guide

If you're reading this from Dubai, Abu Dhabi, or anywhere in the UAE, you've probably heard about GIFT City mutual funds but aren't sure if you actually qualify. 

Maybe you hold an OCI card. Maybe you're planning to return to India soon and wondering if your RNOR status changes things. 

Maybe you've just been told these funds are "only for NRIs" without anyone explaining what that really means.

At Belong, we hear these questions daily from our WhatsApp community. The confusion is real. GIFT City is regulated by the International Financial Services Centres Authority (IFSCA), not SEBI. The rules are different from mainland India mutual funds. And the eligibility criteria aren't always clearly explained.

This guide will answer every question you have about who can invest in GIFT City mutual funds and how to get started.

What Are GIFT City Mutual Funds?

Before we talk about who can invest, let's quickly clarify what we're discussing.

GIFT City (Gujarat International Finance Tec-City) is India's first International Financial Services Centre (IFSC). Think of it as India's version of Singapore or Dubai's financial zones. It operates under special rules that make investing easier and more tax-efficient for people living outside India.

GIFT City mutual funds are offshore funds launched by Asset Management Companies (AMCs) operating within this special zone. They're regulated by IFSCA and denominated in foreign currencies like USD, GBP, and AED. This means you invest in dollars and receive returns in dollars. No constant currency conversion headaches.

As of mid-2025, GIFT City hosts over 200 funds, including Alternative Investment Funds (AIFs) and retail mutual funds (Source: IFSCA).

👉 Tip: Unlike regular Indian mutual funds that restrict NRIs from the US and Canada, GIFT City funds are accessible to NRIs from nearly all FATF-compliant countries.

NRI Eligibility: The Core Investor Group

NRIs (Non-Resident Indians) are the primary target audience for GIFT City mutual funds. But what exactly makes you an NRI?

Under the Income Tax Act and FEMA (Foreign Exchange Management Act), you're classified as an NRI if you meet both conditions:

You hold an Indian passport AND you stayed outside India for more than 182 days in the financial year (April to March).

There are some nuances. If your Indian income exceeds ₹15 lakh, the 182-day rule becomes 120 days. But for most UAE-based Indians earning primarily in dirhams, the 182-day rule applies.

For GIFT City investments specifically, NRIs can invest freely in mutual funds, AIFs, fixed deposits, and other products available within the IFSC. There are no special approvals needed beyond standard KYC.

Use Belong's Residential Status Calculator to confirm your exact status before investing.

Can OCI Cardholders Invest in GIFT City?

Yes. Overseas Citizens of India (OCI) are eligible to invest in GIFT City mutual funds.

An OCI cardholder is a foreign citizen who has Indian ancestry or was married to an Indian citizen. They hold a foreign passport but have a special card that allows them to live, work, and invest in India without a visa.

For tax purposes, OCIs are typically treated as non-residents if they spend fewer than 182 days in India. This gives them the same GIFT City benefits as NRIs.

SEBI's June 2024 amendment was a major development for OCIs. It now allows NRIs and OCIs to contribute up to 100% of the corpus in funds seeking FPI registration at GIFT IFSC (Source: Lexology). Before this change, the limit was 50%.

This means OCI families can now completely own and control global funds based in GIFT City. These funds can invest in Indian capital markets, providing a regulated avenue to pool family wealth through professionally managed structures.

👉 Tip: If you're a PIO (Person of Indian Origin) cardholder, convert to OCI before December 31, 2025. After this date, PIO cards become invalid.

RNOR Status: The Transition Zone

This is where things get interesting for NRIs planning to return to India.

RNOR stands for Resident but Not Ordinarily Resident. It's a transitional tax status that applies when you move back to India after being an NRI for several years.

You qualify as RNOR if you meet either of these tests:

Test 1 (9 out of 10 rule): You were NRI in at least 9 of the past 10 financial years.

Test 2 (729-day rule): You were in India for 729 days or less in the 7 financial years before this year.

Here's what RNOR status means for GIFT City investments:

During your RNOR period (typically 2-3 years after returning), you're still taxed like an NRI on foreign income. Your existing GIFT City investments continue to enjoy the same tax treatment. Interest from your GIFT City fixed deposits remains tax-free in India.

However, new investments in GIFT City products during your RNOR period require careful consideration. The tax benefits apply, but your residential status affects how you're treated by fund houses during KYC.

👉 Tip: If you're planning to return to India, invest in GIFT City products while you're still an NRI. The investments will continue during your RNOR years with the same benefits.

Who Cannot Invest in GIFT City Mutual Funds?

Not everyone qualifies. Here are the groups that cannot invest:

Resident Indians: If you're an ordinary resident of India (ROR), you cannot directly invest in GIFT City mutual funds or fixed deposits. Resident Indians can only invest up to USD 250,000 per year in IFSC securities under the Liberalised Remittance Scheme (LRS), and this is restricted to certain products (Source: ICICI Bank).

US and Canada Residents (for some products): While GIFT City funds generally accept NRIs from all countries, some funds exclude US and Canada residents due to FATCA compliance requirements. The good news? Unlike mainland India mutual funds that broadly restrict US/Canada NRIs, most GIFT City funds actually welcome them.

FATF Blacklisted Countries: Investors from countries on the Financial Action Task Force (FATF) blacklist or grey list are not eligible.

Minimum Investment: The $500 Breakthrough

Until recently, GIFT City investments were primarily for high-net-worth individuals. Most AIFs required USD 150,000 minimum (Source: IFSCA Circular, Feb 2025). This put them out of reach for many middle-income NRIs.

That's changed significantly in 2025.

Tata Asset Management launched the Tata India Dynamic Equity Fund at GIFT City in September 2025 with a minimum investment of just USD 500 (Source: Business Standard). This is a retail-oriented inbound feeder fund that invests in Indian mutual fund schemes and ETFs.

This represents a major shift. For the first time, mid-income NRIs can access GIFT City's tax benefits without needing six-figure investments.

Here are current minimum investments across GIFT City products:

👉 Tip: Use Belong's Mutual Funds Explorer to compare available GIFT City funds and their minimum investments.

Tax Benefits by Investor Status

The tax treatment is a major reason NRIs choose GIFT City over regular Indian investments. Here's how it works for each status:

For NRIs and OCIs:

Capital gains from GIFT City mutual funds are not taxed in India. You pay taxes only according to your country of residence. For UAE residents with no capital gains tax, this means completely tax-free returns.

There's no TDS (Tax Deducted at Source) on GIFT City mutual fund redemptions. Compare this to mainland India mutual funds where 12.5% TDS applies on equity fund gains and up to 30% on debt funds for NRIs.

No Securities Transaction Tax (STT) or Commodities Transaction Tax (CTT) applies to GIFT City transactions.

For RNORs:

Your GIFT City investment returns remain tax-free in India during the RNOR period. Only India-sourced income is taxable. Foreign income stays exempt.

Once RNOR status ends and you become ROR (Resident and Ordinarily Resident), the treatment changes. Capital gains from that point may become taxable depending on how the gains are classified.

For UAE NRIs specifically:

The India-UAE DTAA (Double Taxation Avoidance Agreement) combined with GIFT City benefits creates an optimal situation. No tax in India (GIFT City exemption) plus no tax in UAE (zero capital gains tax jurisdiction) equals completely tax-free growth.

Documents Required to Invest

GIFT City KYC has become simpler. IFSCA implemented video KYC for NRIs in 2025, allowing remote completion without visiting India.

Here's what you need:

Identity Proof: Valid passport with at least 6 months validity

NRI Status Proof: Employment visa, residence permit, or work permit from your country of residence

Overseas Address Proof: Utility bill, bank statement, or government-issued document (less than 3 months old)

PAN Card: Required for most transactions, though some Category I and II AIF investments may be exempt

Indian Address Proof (if applicable): Aadhaar card or similar document if you maintain an Indian address

FATCA Declaration: For US residents or US persons, a declaration under the Foreign Account Tax Compliance Act

Photograph: Recent passport-size photo

Bank Account Details: NRE, NRO, or FCNR account details for transactions

👉 Tip: Don't have a PAN card? You can apply online before starting your investment journey.

Step-by-Step: How to Start Investing

Here's the process to invest in GIFT City mutual funds:

Step 1: Verify Your Status

Use Belong's Residential Status Calculator to confirm you're an NRI or OCI. This matters for both eligibility and tax treatment.

Step 2: Choose Your Investment Avenue

Decide between mutual funds (starting at USD 500), AIFs (minimum USD 75,000), or fixed deposits (starting at USD 500). Your choice depends on your risk appetite, investment horizon, and capital available.

Step 3: Select a Platform or Fund House

You can invest directly with AMCs operating in GIFT City, through authorized banks with IBU (International Banking Unit) presence, or through platforms like Belong that simplify the process.

Step 4: Complete KYC

Submit your documents and complete video KYC. The process takes 15-30 minutes with a representative verifying documents and performing liveness checks.

Step 5: Open Required Accounts

You may need a foreign currency account with an IBU. Major banks like ICICI, HDFC, Axis, and SBI have GIFT City operations.

Step 6: Transfer Funds

Move your investment amount through authorized banking channels. Ensure FEMA compliance by using proper documentation.

Step 7: Invest and Monitor

Select your fund, invest, and track performance. Most platforms offer digital dashboards for monitoring.

Common Mistakes NRIs Make

After helping hundreds of NRIs through this process, here are the pitfalls we see:

Confusing residential status: Many NRIs aren't sure if they're NRI, RNOR, or ROR. This affects everything from eligibility to tax treatment. Always verify before investing.

Ignoring country-specific restrictions: Some funds don't accept US or Canada NRIs. Check the fund's offering document before proceeding.

Delaying PAN application: No PAN means delays in KYC. Get your PAN card sorted early.

Not understanding repatriation: GIFT City funds are fully repatriable. Principal and returns can move to your country of residence without the complications of standard repatriation rules.

Waiting for "the right time": The tax holiday for GIFT City entities has been extended to March 2030 (Source: Budget 2025). But waiting means missing out on compounding benefits.

How GIFT City Compares to Regular Indian Mutual Funds

Here's a quick comparison to help you decide:

For UAE NRIs earning in dirhams who may return to India someday, GIFT City's USD-denominated options provide currency protection that INR-based investments can't match.

Ready to Get Started?

GIFT City mutual funds offer something rare: tax-efficient access to Indian markets without the usual restrictions NRIs face. Whether you're an NRI in Dubai, an OCI in London, or someone planning to return to India, these funds deserve serious consideration.

The key is understanding your eligibility, completing proper KYC, and choosing the right products for your goals.

Join Belong's WhatsApp community where many NRIs discuss GIFT City investments, tax strategies, and share their experiences. Have questions about your specific situation? Connect with fellow NRIs who've been through the process.

Download the Belong app to explore GIFT City investment options, compare FD rates, and get started with your first investment.

Sources:

• IFSCA NRI Section
• SEBI FPI Amendment Regulations 2024
• Business Standard - Tata AMC GIFT City Fund
• ICICI Bank NRI GIFT City Guide