GIFT City Sees Retail Rush As Indians Seek Global Investments, Pg11

Key Highlights:

• The number of retail investors in GIFT City's international schemes surged to 8,467 in the April-June quarter, up from 3,483 in the previous quarter.
• Retail investors now constitute over 52% of the total investors in GIFT City's fund management ecosystem, marking the first time they hold the largest share.
• This increase is attributed to Indian markets being outpaced by global peers, with benchmark Nifty 50 and Sensex indices down 8-10% while global markets grew 10-59%.
• The International Financial Services Centres Authority (IFSCA) data confirms this growing trend of Indians seeking global investment diversification.

Detailed Insights:

• GIFT City in Gandhinagar, Gujarat, functions as an International Financial Services Centre (IFSC), offering tax benefits and reduced regulatory compliance to attract global investments.
• It provides an avenue for high-net-worth individuals, NRIs, and retail audiences to invest in foreign markets using foreign currencies through GIFT City IFSC funds.
• The momentum in retail investment is also linked to improved access to global investments from within India and greater clarity on taxation of retail schemes and ETFs.
• Alternative Investment Funds (AIFs) saw a 26% quarter-on-quarter increase to 7,683 investors, though their share in the overall fund management ecosystem decreased.
• Previously, many fund houses halted fresh intake into overseas schemes due to industry-wide overseas investment limits, indicating high demand.
• The underperformance of the domestic stock market has driven retail investors with capital to seek growth opportunities in other global markets.

Key Concepts Involved:

• GIFT City: India's first operational International Financial Services Centre (IFSC), located in Gandhinagar, Gujarat, designed as a global financial and IT hub.
• International Financial Services Centre (IFSC): A jurisdiction that provides financial services to non-residents and residents, in a currency other than the domestic currency, often with regulatory and tax incentives.
• International Financial Services Centres Authority (IFSCA): A unified statutory regulatory body established in April 2020 under the IFSCA Act, 2019, to develop and regulate financial products, services, and institutions in IFSCs in India.
• Alternative Investment Funds (AIFs): Privately pooled investment vehicles that collect funds from sophisticated investors for investing in diverse asset classes like private equity, venture capital, and real estate, regulated by SEBI.
• Liberalised Remittance Scheme (LRS): An RBI framework under FEMA that allows resident individuals to remit up to USD 250,000 per financial year for permitted current or capital account transactions, including overseas investments.