The IFSC established in GIFT City, Gandhinagar, Gujarat operates under the Special Economic Zones Act of 2005 and holds the exclusive status of being the only approved IFSC in India. GIFT City is designated as a Special Economic Zone (SEZ), offering various benefits and incentives. Furthermore, within the territory of IFSC, both “entities” and “units” are provided the classification of “person’s resident outside India.”
Positioned as a prominent global hub for financial and IT services, GIFT City is strategically positioned to effectively compete with other well-established IFSCs like the ones established in Dubai, London, Singapore and alike. Investment prospects like minimal operational costs, conducive business environment, and attractive tax policies, among other benefits are worthy of raising eyebrows of any HNI or UHNI and institutions which intend on investing their funds in a safe and regulated space while also reserving the high ROI yielding potential.
According to the provisions set out in the IFSC (FM) Regulations, 2022 or FM Regulations, any entity intending to undertake fund management activities within the purview of the IFSC shall compulsorily register itself as a Fund Management Entity (FME) in accordance with the requirements laid down by the regulations. There are 3 different categories of FMEs (pooling vehicles), which are (i) Authorized FME; (ii) Registered FME (Non-Retail); and (iii) Registered FME (Retail). Individual registration of these pooling vehicles ensure registration for separate products is not required, thereby, further increasing the effectiveness and efficiency of the system.
Upon an AIF’s registration under the FM Regulations, such AIFs are authorized to launch a fund within 21 days following the submission of the Private Placement Memorandum (PPM) to IFSC, provided that all IFSC observations are addressed. Alternatively, funds comprised solely of accredited investors or those operating as venture capital schemes can utilize a green channel, bypassing the need for prior comments from IFSC, thereby enhancing both the speed and cost efficiency of fund management activities within the IFSC framework.
Source: Barandbench
