Does GIFT City open new foreign currency opportunities for Indian investors?
Summary:
Indians now have enhanced access to foreign currency accounts at GIFT City, established by PM Narendra Modi in 2011 as a rival to Dubai. With relaxed regulations than in India, GIFT City is drawing foreign investors. A recent RBI circular allows Indians to use GIFT City for increased overseas spending and investments.
Foreign currency accounts at GIFT City, once limited to investing in overseas securities and paying for foreign tuition, can now be used more broadly—for medical expenses, education, and specific investments, up to US$ 250,000 annually. According to Jaiman Patel, partner at EY India, this change will boost banking and financial services in GIFT City, benefiting banks and opening new opportunities for life insurance companies.
The initiative consolidates the deployment of funds abroad, providing better supervision for Indian authorities. Suresh Swamy, a partner at PwC Mumbai, highlights that it redirects financial activities to GIFT City from hubs such as Singapore or Dubai. Despite updates, remittance regulations from India remain unchanged, according to former Central Bank deputy governor Mr. R. S. Gandhi. India has also ramped up GIFT City activity, facilitating Indian company listings and family investment funds for high-net-worth individuals in the past year.
Source: IBEF
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