India’s wealthiest families are increasingly turning to the Gujarat International Finance Tec-City (GIFT City) to invest abroad, bypassing restrictions on overseas capital outflows. A recent surge in investments via the Overseas Portfolio Investment (OPI) route saw more than $778 million routed out of India in just six months, according to official data from the Reserve Bank of India.
This investment path, which became available in June, allows family offices and ultra-wealthy individuals to move funds abroad well beyond the $250,000 annual cap imposed on personal investments. The move offers the country’s richest families greater flexibility to diversify their assets globally, tapping into foreign stocks, bonds, and private funds.
Since the introduction of the OPI route, India’s growing class of billionaires and tycoons has expanded its global investment footprint. The flow of funds has also caught the attention of foreign investors, as the International Financial Services Centres Authority (IFSCA), the regulator for GIFT City, confirms increasing foreign contributions.
“Wealthy Indians and family offices want to diversify their investments globally,” said Gautami Gavankar, president of Kotak Mahindra Bank Ltd. “Through GIFT City’s OPI route, a much larger amount of money can be invested abroad compared to the $250,000 limit.”
Bloomberg Intelligence reports that the demand for international diversification stems from a decade-long boom in wealth in India, though the Indian stock market has recently faced a dip. With India’s stock index down about 7% from its September 2023 peak, the OPI route has become an attractive avenue for those seeking better returns elsewhere.
Notably, investments routed through GIFT City are not just limited to stocks. Alternative funds and private credit funds are also seeing rising interest. “India’s outbound money is going to balloon going forward,” said Dev Sampat, co-founder of fund administration firm Dovetail Group, which handles $2.1 billion in assets.
GIFT City, set up in Prime Minister Narendra Modi’s home state of Gujarat, was designed as a tax-advantaged, free-market zone, offering a route to circumvent India’s capital controls. Despite this, the government has paused allowing family offices to set up funds directly in GIFT City, fearing potential tax evasion. As a result, stock portfolio managers and alternative fund managers have increasingly used the OPI route to meet this demand.
As the demand for these investment pathways grows, major players in India’s wealth management sector are already working on more funds to be launched via GIFT City. For example, Aditya Birla Sun Life Asset Management Co. has raised $70 million for an emerging markets fund, while Mirae Asset Investment Managers India is looking to raise $200 million for a similar fund.
