DSP Mutual Fund has launched India's first retail offshore fund from GIFT City, marking a significant step in providing Indian investors with access to global markets. The fund, named DSP Global Equity Fund, allows Indian residents to invest in a diversified portfolio of global stocks with a minimum investment of $5,000. This initiative bypasses previous limitations and offers a tax-efficient investment route through GIFT City.

Key Highlights of the DSP Global Equity Fund:

• Accessibility: The fund makes global investing accessible to retail investors with a relatively low minimum investment amount.
• Diversification: Investors can diversify their portfolios by investing in a basket of global stocks.
• Tax Efficiency: Utilizing GIFT City's framework provides a tax-efficient route for investing in global markets.
• Regulatory Compliance: The fund operates under the regulations of the International Financial Services Centres Authority (IFSCA), ensuring investor protection.
• Professional Management: The fund is managed by experienced fund managers who conduct thorough market research to select securities.

GIFT City as a Financial Hub:

Gujarat International Finance Tec-City (GIFT City) is India's first International Financial Services Centre (IFSC), designed to attract global businesses and provide a conducive environment for financial operations. The Indian government is actively promoting GIFT City as a "gateway for global capital and financial services," offering tax incentives and a favorable regulatory framework to attract companies.

Benefits of Investing Through GIFT City:

• Tax Benefits: GIFT City offers several tax advantages, including a 10-year tax exemption for companies setting up operations there and no taxes on the transfer of funds from overseas jurisdictions. Interest income earned from money lent to businesses in GIFT City is tax-free, and dividend and long-term capital gains also have concessional tax rates.
• Strategic Location: GIFT City's proximity to Indian markets allows for a better understanding of market dynamics, faster decision-making, and efficient management of India-focused funds.
• Regulatory Environment: The IFSCA provides a stable and predictable regulatory environment, crucial for long-term business planning.
• Cost-Effectiveness: Running a fund in GIFT City is more cost-effective compared to other financial centers like Mauritius and Singapore, due to lower living costs, rentals, and labor expenses.

Trends of Asset Managers Moving to GIFT City:

Many Indian asset managers are shifting their offshore fund businesses from financial hubs like Dubai and Singapore to GIFT City to leverage these benefits. Over the past few years, a significant number of fund managers have set up operations in GIFT City, with substantial commitments and investments.

Challenges and Future Outlook:

While GIFT City has seen a surge in new funds, attracting existing funds from established offshore centers remains a challenge. Issues such as tax and compliance rules need to be addressed to encourage more significant migration of funds. However, with continued government support and a favorable regulatory environment, GIFT City is poised to grow as a global financial hub, offering diverse investment opportunities for both domestic and international investors.

DSP's initiative to launch India's first retail offshore fund from GIFT City is a positive step towards broadening investment horizons for Indian investors and strengthening GIFT City's position in the global financial landscape.