There are several distinct ways an Indian can actually invest abroad, and they differ far more than they first appear. This module walks through each route, US ETFs, UCITS ETFs, GIFT City funds, and international mutual funds and then compares them across the dimensions that matter, so you can find the one that genuinely fits who you are.
The two routes so far, US ETFs and UCITS, share one feature: your money leaves India to reach a foreign market. GIFT City lets you invest globally through a place that is physically in India but legally treated as offshore.
GIFT City, short for Gujarat International Finance Tec-City, is India's first International Financial Services Centre, or IFSC. It sits in Gujarat. What matters is its legal status: for financial purposes, GIFT City is treated as offshore territory.
The idea was to build a financial hub on Indian soil that could compete with places like Singapore and Dubai, by giving it its own regulator, its own rules, and its own tax treatment, all designed to international standards rather than domestic ones.
GIFT City is governed by its own dedicated regulator, the IFSCA, the International Financial Services Centres Authority. This single regulator oversees banking, funds, and markets within the zone.
Fund houses you already recognise, like HDFC, Kotak, ICICI, have begun launching GIFT City funds that invest in global markets. You still fund your investment by remitting under the LRS, so the USD 250,000 annual limit and the TCS rules from Module 1 - Chapter 4 still apply.
The most relevant for most people are outbound global funds. These are GIFT City based funds that invest in international markets, for instance a fund tracking the S&P 500 or the Nasdaq 100. You buy them in a process much like buying a domestic mutual fund. There is also direct access to global stocks and ETFs.
And then, sitting at the higher end, are Alternative Investment Funds, or AIFs, which are aimed at wealthy investors and carry high minimum tickets, often around USD 150,000.
The important recent shift is that GIFT City has genuinely opened up to ordinary resident investors, not just NRIs and the very wealthy. New outbound retail funds with lesser minimums have been launched, however the threshold is still usually around $5,000.
Indian domestic mutual funds that invest abroad share a single industry-wide ceiling on how much they can collectively hold in foreign securities. As that ceiling filled up, many international mutual funds were forced to pause fresh investments, leaving investors who wanted global exposure through the familiar domestic route stuck. GIFT City funds sidestep this entirely.
One question. Less than 10 seconds.
Reinforce what you've learned before continuing to the next chapter.
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