GIFT City advances green light for family offices but capital controls still pose hurdles

While GIFT City has launched a framework for Indian family offices to invest overseas via a domestic platform, strict capital controls and entrenched offshore ties remain obstacles to significant wealth migration, prompting questions about its future potential as a global investment hub.

GIFT City is building the legal and institutional scaffolding that Indian family offices would need to invest overseas through a domestic platform, but the bigger obstacle remains the same one that has long shaped the country’s capital flows: tight controls on moving money abroad. K Rajaraman, chair of the International Financial Services Centres Authority, said the Family Investment Fund framework under the IFSCA’s 2025 fund-management rules is now operational and should let wealth holders access international markets through vehicles based in the special economic zone rather than by setting up elaborate offshore structures elsewhere. Yet, as a report by The Hindu BusinessLine notes, the real test is not whether the route exists on paper, but whether families with entrenched offshore arrangements will shift to it.

Rajaraman has pointed to early evidence that the broader outbound fund channel is already active. He said GIFT City has about 48 outbound-only schemes that have raised roughly $1.1 billion and invested $945.9 million entirely in foreign assets, spanning 59 countries. According to IFSCA data cited by The Hindu BusinessLine, the United States accounts for the largest share of those overseas allocations, followed by markets including Mauritius, Hong Kong, Singapore and the UK. Resident investors are also using the IFSC route, with Rajaraman saying domestic participants have put $292.1 million into global-facing schemes through the Liberalised Remittance Scheme, although those figures do not yet show how much family-office money has specifically moved into the newer fund structure.

The first foreign Family Investment Fund under the 2025 regime was registered on June 29, 2026, after the regulator said in April that it had approved the framework. The Hindu BusinessLine reported that the vehicle, Vikramee Family Investment Fund IFSC, is managed by Poornam Asset Management IFSC. Even so, Rajaraman said the hardest problems are increasingly outside the regulator’s control: many family offices already have holding companies, trusts and operating businesses in established offshore centres, and unwinding those arrangements can take years. Succession planning can add another layer of complexity when heirs are tax resident in the US, Europe or other jurisdictions, making the transition to GIFT City slower than the rulebook might suggest.

Alok Sanghi, director at Ahmedabad-founded Resolute Corp, told The Hindu BusinessLine that GIFT City is already proving useful for outbound corporate investments because it is cheaper than traditional offshore hubs, but he said family offices are still boxed in by India’s wider capital regime. Sanghi argued that the restrictions limit how much wealthy Indian families can place in foreign markets and said the amount may be less than 5 per cent of net worth. He contrasted that with family offices in Switzerland, the US and Europe, which typically have broader international exposure and greater freedom to move across asset classes. His view, echoed in reporting by Outlook Business, is that GIFT City will matter only if policy becomes more predictable and long-term credibility improves.

IFSCA says the financial centre is nevertheless deepening its product range. The Hindu BusinessLine reported that GIFT City now has more than 340 fund schemes, including private equity, private credit and long-short strategies, while the portfolio management services segment oversees about $3.4 billion across 370 accredited relationships. Yet Rajaraman also said 91.3 per cent of deployed capital, or $17.88 billion, is still tied to India-focused strategies. That suggests GIFT City has built a functional platform for sophisticated investors, but its ability to draw large-scale family wealth offshore will depend on whether India relaxes capital controls, expands available international products and convinces families that the new route is easier than the old one.