Securities and Exchange Board of India (SEBI) on Tuesday issued Operating Guidelines for Alternate Investment Funds (AIFs) in IFSC at Gujarat's GIFT City. With the announcement of AIF regulations, GIFT city can now potentially become the preferred destination for launching offshore funds for investment in India and also create an ecosystem for the global fund managers to operate in.
Andrew Holland, CEO at Avendus Capital Alternate Strategies said, “This is a great step forward for attracting institutions to set up funds and attract millions of dollars.”
Industry sources explained that with the permission to set up a fund, the whole eco-system required for running the business will very soon come up at the IFSC. Several fund industry consultants, including the top law and advisory firms, have decided to market the setting up of AIFs and to facilitate this, they are starting online roadshows from next week.
Dipesh Shah, Head (GIFT IFSC), said, “IFSC provides a great platform for India to set up offshore fund industry and generate jobs. SEBI has been providing key enabling support for the growth of IFSC Capital Market business. In addition to that, AIFs in IFSC would also help create high-end jobs and increase export earnings for the country.”
Shah further added that GIFT IFSC's competitive tax regime along with the low cost of operations compared to any other global financial centres, would help boost various institutions to set up fund business in IFSC.
While there is a tax holiday at Gift City, the minimum alternative tax would bring down overall tax burden to 9 per cent compared to onshore funds and very low-cost structure will attract more funds to set up shops rather than any offshore tax havens.
Some leading fund houses have already approached Gift city authorities to set up operations, funds and branches which will increase onshore jobs.
According to Sebi guidelines, AIF is IFSC can now invest into India under the FPI / FVCI and FDI route. Minimum corpus size to be at $3 million. Minimum investment value for an investor shall be $150,000 (for employees or directors of AIF or manager, the minimum value shall be $40,000). New Sponsors or managers will have to set up business only by way of a company or Limited Liability Partnership (LLP).