'Domestic family offices not stopped from setting up funds in GIFT City'

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No regulator has stopped domestic family offices from setting up investment funds in GIFT City, government sources clarified late Friday night. “All eligible persons resident in India are permitted to make overseas direct investments under the automatic route,” said a source. For example, Indian entities can invest 400 per cent of their net worth, and individuals can remit up to $250,000 in a financial year.

Similarly, investment funds or vehicles set up in India, such as Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs), are permitted to undertake overseas investments in the form of Overseas Portfolio Investments (OPI) under the automatic route.

The clarification comes in the wake of a recent debate on social media claiming that Indian regulators have stopped allowing local family offices to set up investment funds in its new finance hub, due to concerns that these arrangements may be used to evade taxes and capital controls.

Former Infosys CFO Mohandas Pai drew the government's attention to one such tweet. He requested the Prime Minister to intervene, as such moves could hamper global investments. Some media houses also published reports on this, citing the tweets.