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GIFT IFSC - short for Gujarat International Finance Tec-City - is India's first International Financial Services Centre (IFSC), located in Gandhinagar, Gujarat. Think of it as India's answer to hubs like Singapore or Dubai: a purpose-built financial zone designed to let global capital flow into Indian markets under an internationally benchmarked regulatory and tax efficient framework built for international investors.

It's regulated by the International Financial Services Centres Authority (IFSCA), a unified regulator created to give GIFT City a single, streamlined rulebook - separate from India's domestic regulatory maze of SEBI, RBI, and IRDAI.

Historically, a foreign investor wanting exposure to India generally faced a fragmented process: multiple regulators, onshore tax complexity, and structures that weren't designed with global capital in mind. GIFT City consolidates a fragmented process into a single, internationally benchmarked jurisdiction.

India's first International Financial Services Centre, measured across banking, debt and exchange activity.

What these entities provide access to is significant. India's equity market carries over US$5 trillion in market capitalisation, with GIFT Nifty alone recording monthly trading turnover that has exceeded US$100 billion - This level of trading activity indicates significant market participation in GIFT Nifty contracts.

The scale of activity within GIFT City suggests it has become an increasingly important channel for international participation in Indian financial markets.

As at IFSCA Q4 FY2025–26 bulletin. Figures describe the GIFT IFSC ecosystem, not IG Funds or any specific fund. For information only.

A listed India ETF typically provides index exposure, but has less access to actively managed Indian fund strategies and is not designed specifically for wholesale investors. Investing through IG Funds, which routes its investments via GIFT City Category III AIF, is designed to bridge that gap: it lets Australian wholesale investors access India's growth story through professionally managed, India-domiciled strategies, wrapped in an Australian regulated structure built for cross-border capital from day one.

This is where GIFT City's advantage becomes more concrete.

If an Australian investor were to invest directly into Indian equities or funds via the standard FDI/FPI route (outside the IFSC) - capital gains generally fall under ordinary Indian tax rules. As a non-resident, that may include TDS deducted at source on redemption, capital gains tax applying on long-term and short-term rates, and often an Indian tax return required to reclaim any excess TDS - a process that can take months.

Inside GIFT City, Section 10(4D) of the Income Tax Act exempts income arising to a non-resident from the transfer of units of investment funds set up in an IFSC, or from the transfer of securities by such funds. In practice, when a Category III AIF invests in Indian equity mutual funds, the capital gains are fully exempt from capital gains tax in India at the investor level. No TDS is deducted, and no Indian tax return is typically required if that's the investor's only India-sourced income.

The practical difference: direct FDI into India usually means navigating TDS, standard capital gains rates, and reclaim processes/DTAA complexities. Routing through a GIFT City Category III AIF may remove that friction - gains are exempt at the source, not deferred or refunded later.

This is general information, not personalised tax advice. Tax treatment always depends on individual circumstances, and Australian investors should also factor in how gains are treated under Australian tax law. We recommend speaking with a qualified tax adviser before making investment decisions.

Within GIFT City, the vehicle IG Funds uses is the Category III Alternative Investment Fund (AIF) - a pooled investment structure that can invest across Indian equities and mutual fund schemes (think HDFC, Mirae, Nippon-managed strategies) while sitting inside the IFSC framework. IG Funds is the investor into this GIFT City Category III AIF, and Australian wholesale investors invest into IG Funds - an AUD-denominated, Australian regulated structure that handles the complexity of accessing GIFT City and the underlying Indian schemes on your behalf.

IG Funds selected this route deliberately, because it offers:

• Direct access to India's growth opportunity
• Internationally recognised asset management partners
• Cross-border investing through foreign-currency vehicles
• Regulatory oversight under a single, global-standard regulator - IFSCA
• A tax-efficient and investment-friendly environment
• An institutional platform designed specifically for international investors

GIFT City appears to be India's deliberate answer to “how do we make our markets investable for the rest of the world.” For Australian wholesale investors looking to diversify beyond AU/US-heavy portfolios, it's the infrastructure that makes Indian market access practical rather than theoretical.

IG Funds connects Australian wholesale investors to Indian capital markets via GIFT City, Reach out to learn more about how this works in practice.

Sources: Section 10(4D), Income Tax Act, 1961; Income Tax Department of India, “Taxation of Non-Residents”; IFSCA Bulletin Q4 FY2025–26 (Jan–Mar 2026).

Disclaimer: Prepared by India Growth Funds Aust. Pty Ltd (IGF), authorised representative #1313345 of Non Correlated Advisors AFSL 430126. Any advice is general in nature and does not consider your personal circumstances, please consider if it is right for you.

As with any investment, accessing Indian capital markets carries risk. These include market risk (Indian equities can be volatile), currency risk (returns are affected by AUD/INR movements), and regulatory and tax risk — the Section 10(4D) exemption reflects the current legal position and may be amended by future legislation. Past growth in GIFT City's ecosystem, as reflected in the statistics above, is not a guarantee or indicator of future investment returns. Investors should weigh these risks alongside the potential benefits set out in this document before making any investment decision.

This document is intended for wholesale clients only, as defined under the Corporations Act 2001 (Cth). No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the statements, estimates, opinions, conclusions and other information contained in this document. It does not constitute financial product advice and is not intended for distribution to retail investors.