GIFT City Funds offer new route to global investing, says Daulat Finvest CEO

With global investing gaining traction, Indian investors are increasingly looking at GIFT City as a new route to access overseas markets. According to Varun Fatehpuria, Founder and CEO of Daulat Finvest Private Limited, GIFT City funds have come into focus mainly because traditional international mutual fund routes have hit regulatory limits.

India has a $7 billion industry-wide cap on overseas investments through domestic mutual funds. Since this limit has been exhausted, investors now have fewer options to invest in global indices like the S&P 500 or Nasdaq 100. GIFT City funds provide an alternative within a familiar regulatory framework overseen by the IFSCA, even though investments are technically treated as offshore.

One key advantage of GIFT City funds is taxation. Most of these funds are structured as trusts, meaning tax is paid at the fund level. Investors receive redemption proceeds after tax, unlike traditional international mutual funds where tax liability rests with the investor.

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In addition, there is no Tax Collected at Source (TCS), improving liquidity compared to direct overseas stock investments.

Fatehpuria said the risks are largely similar to any international investment, such as market volatility and currency movements. However, investors need to get comfortable with the process of remitting money abroad under the Liberalised Remittance Scheme (LRS).

These funds are dollar-denominated, which can help investors gradually build foreign currency assets and benefit from rupee depreciation.

In terms of portfolio allocation, Fatehpuria suggests starting with a 7–10% exposure to global markets and gradually increasing it to 15–20% as comfort levels rise.

While costs are higher—with expense ratios ranging between 1.5% and 1.75%—GIFT City funds can play a useful role as a satellite allocation for diversification beyond India.

For the entire discussion, watch the accompanying video