Foreign currency account usage widens at GIFT City, boosts business prospects

Indians now have expanded access to foreign currency accounts at Gujarat International Finance Tec-City (GIFT City), established by Prime Minister Mr. Narendra Modi in 2011 as a competitive alternative to financial centres like Dubai. With its relaxed regulatory framework compared to the rest of India, GIFT City has seen growing interest from foreign investors. A recent circular by the Reserve Bank of India allows Indian investors to use GIFT City for increased overseas spending and investments.

Previously restricted to investing in overseas-listed securities and paying for foreign university tuition, foreign currency accounts at GIFT City can now be used for broader purposes such as medical expenses, education, and specific investments, up to US$ 250,000 annually. This regulatory shift is expected to boost banking and financial services within GIFT City, benefiting banks and opening new avenues for life insurance companies, noted Jaiman Patel, partner at EY India.

The move aims to centralize the deployment of remitted funds overseas, providing Indian authorities with improved oversight. According to PwC Mumbai partner Mr. Suresh Swamy, this change redirects financial activities previously conducted through jurisdictions like Singapore or Dubai to the International Financial Services Centre at GIFT City. Despite these changes, overarching regulations governing remittances from India remain unchanged, as highlighted by former Central Bank deputy governor Mr. R. S. Gandhi. Over the past year, India has implemented measures to enhance activity at GIFT City, including enabling Indian company listings and facilitating family investment funds for high-net-worth individuals.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.