GIFT City's 2025-26 Breakout for NRIs: The First Retail Fund, Video KYC, Lower PMS Minimums, and What Is Actually Worth Your Time

The number that tells the story is 3,438. That is how many retail investors held GIFT City fund schemes as of March 2026, up 177.5% in a single quarter from 1,239 in December 2025. For a centre whose entire fund-management story until 2025 was built on USD 150,000 minimums and institutional money, a near-tripling of small investors in three months is the first real evidence that GIFT City is opening to individual NRIs rather than just family offices and foreign banks. The question this guide answers is which parts of that shift are genuinely useful to you, sitting in Dubai or London or New Jersey, and which parts are headline noise dressed up as opportunity.

The 30-second answer: GIFT City had a real 2025-26: the IFSCA (Fund Management) Regulations, 2025 (notified 19 February 2025) cut the PMS minimum from USD 150,000 to USD 75,000 and the scheme corpus floor from USD 5 million to USD 3 million; video KYC went live so NRIs in the US, UK, UAE, Canada and others can open accounts in 3 to 5 days without flying in; Tata launched the first retail inbound fund at a USD 500 minimum in September 2025; and Budget 2025 extended the IFSC tax sunset to March 2030. Fund-level income is exempt under Section 10(4D), so there is no Indian tax or TDS for an NRI investor. The genuine wins are video KYC, USD deposits and the retail fund. The hard caveat: for US persons, pooled GIFT City funds are PFICs and usually a worse outcome than a US brokerage.

This is a news-analysis piece, not an evergreen primer. If you want the mechanics of how GIFT City works, who regulates it, and the account types, read the GIFT City investing guide first; this guide assumes you know what an IFSC and an IBU are. What follows is dated to March 2026 and decision-focused: what changed in the last year, what it means for an individual NRI's money this quarter, and where the marketing has run ahead of the substance.

The institutional numbers are huge, and mostly not about you

Start by separating the two stories, because the press release blurs them. GIFT City's banking assets crossed USD 106.7 billion by February 2026, more than seven times the USD 14 billion of September 2020. There are now 37 banks with IFSC Banking Units, 20 foreign and 17 domestic, and 2025 brought in names like Qatar National Bank, First Abu Dhabi Bank, Mashreq, Credit Agricole and Societe Generale. On the fund side, 202 Fund Management Entities had registered by December 2025, running 327 Alternative Investment Funds targeting USD 77 billion. In October 2025 the centre launched a Foreign Currency Settlement System so IBUs can settle dollar transactions locally instead of routing through correspondent banks in New York.

Almost none of that is a retail NRI story. A USD 77 billion AIF corpus is built from sovereign wealth funds, pension money, and HNI commitments at USD 150,000 and up. The bank-asset surge is trade finance, external commercial borrowings, and treasury operations. When a wealth-management pitch leads with "USD 106 billion" to sell you a GIFT City product, it is borrowing institutional scale to dress up a retail decision. The honest framing is that GIFT City has succeeded as an offshore wholesale financial centre, and is only now, in 2025-26, building the retail plumbing that makes it relevant to a salaried NRI with a few thousand dollars to deploy. The institutional growth tells you the centre is durable and politically backed; it does not tell you that a given fund is right for your portfolio.

The four changes that actually matter to an individual NRI

Four 2025-26 developments cross the line from institutional to personal. Take them in order of how much they change your decision.

Video KYC is the unlock nobody talks about enough. Until 2025, opening a GIFT City account meant either physically visiting India, getting documents attested at an Indian embassy, or couriering notarised paper across continents. That friction quietly killed more retail interest than any minimum-investment rule. Following an IFSCA consultation paper dated 10 July 2025, the Video-based Customer Identification Process (V-CIP) went live, with AI face-matching, liveness detection and geo-tagging in a 15 to 30 minute session where you hold your original PAN and passport up to the camera. It is available to NRIs in the UAE, US, UK, Canada, Singapore, Germany, France, Japan and South Korea, and most banks now activate an account in 3 to 5 business days with no physical document shipping. This is the single change that makes everything else usable. If you tried GIFT City in 2023 and gave up at the paperwork, that obstacle is gone.

The retail fund minimum collapsed from USD 150,000 to USD 500. In September 2025, Tata Asset Management's GIFT IFSC arm launched the Tata India Dynamic Equity Fund with a minimum ticket of USD 500, the first inbound mutual fund cleared as a Retail Scheme under the 2025 regulations. Structurally it is a feeder: it dynamically allocates 50 to 100% to broad-based Indian equity funds and ETFs and up to 50% to sectoral and thematic schemes. Before this, a pooled GIFT City India-equity vehicle was an AIF requiring USD 150,000, which put it out of reach for everyone but HNIs. Nippon India and Mirae Asset have both signalled retail launches to follow. This is a genuine democratisation, with one large asterisk for US readers covered below.

The PMS minimum dropped to USD 75,000. For NRIs who do clear that bar, the IFSCA (Fund Management) Regulations, 2025 cut the Portfolio Management Service minimum from USD 150,000 to USD 75,000, and the minimum scheme corpus from USD 5 million to USD 3 million. PMS matters disproportionately for one group: US-based NRIs, because in a PMS you own individual securities in your own name rather than units of a pooled fund, which sidesteps the PFIC problem entirely. Halving the entry point makes the only US-friendly GIFT City equity structure reachable for a far larger slice of readers.

Deposits and global investing matured into real products. GIFT City USD fixed deposits now run at roughly 4.5% to 6% depending on bank and tenor, available in USD, GBP, EUR, AED and SGD from 7 days to 39 months, with interest exempt from Indian tax and no TDS. Separately, the outbound side opened up: in February to March 2026, PPFAS ran NFOs for the Parag Parikh IFSC S&P 500 Fund of Fund and the Nasdaq 100 Fund of Fund, letting investors reach US indices through the GIFT City framework, and IFSC-registered brokers now offer direct US stocks and unsponsored depository receipts on NSE IX. The outbound funds are primarily a resident-Indian story (they use the LRS route, and the 20% TCS above Rs 10 lakh in aggregate per year applies from 1 April 2025), so an NRI investing foreign currency they already hold abroad gets less from them than the marketing implies. For an NRI, the deposit is the cleaner offshore product than the outbound fund.

Why the tax exemption is real but conditional

The line you will hear repeatedly is "GIFT City funds are tax-free." It is true in a precise, limited way, and dangerously misleading if you stop there.

At the fund level, income earned by an IFSC retail scheme or AIF is exempt from Indian income tax under Section 10(4D). For the investor, there is no Indian capital gains tax and, critically, no TDS on redemption for a non-resident. That last point is worth more than it sounds. When you redeem a domestic Indian equity mutual fund as an NRI, the registrar deducts TDS under Section 195 read with 115AD on your gain, often correctly but sometimes clumsily, and on property and off-market deals buyers routinely over-withhold and trap your cash for a year. GIFT City removes that entire machinery. No Section 197 lower-deduction certificate, no refund cycle, no float lent to the government interest-free. For the mechanics of how onshore over-withholding works and why it costs you, see the capital gains guide.

But "no Indian tax" is only a net benefit if your country of residence also leaves the gain alone. Here the answer is sharply country-specific.

For a UAE resident, this is close to perfect. The Emirates levy no personal capital gains tax, so a Dubai-based NRI in the Tata retail fund pays zero in India and zero at home. End to end tax-free, legitimately. This is the cleanest case GIFT City has, and it is why the centre is marketed hardest into the Gulf.

For a UK or Canada resident, the Indian exemption is a wash, not a win. You still owe UK capital gains tax or Canadian tax on the gain when you realise it, and because India charged nothing, there is no foreign tax credit to offset the home bill. You end up paying exactly what you would have paid on any foreign fund, with the added complexity of a GIFT City wrapper. The UK reporting-fund status question and Canada's own foreign-investment-entity rules can make the paperwork worse than a plain onshore approach. For UK and Canada NRIs, GIFT City equity funds are convenient, not tax-advantaged.

Put real numbers on the UAE versus UK gap. Suppose a Dubai NRI and a London NRI each put USD 50,000 into the Tata fund and it grows to USD 70,000 over five years, a gain of USD 20,000. The Dubai resident redeems and keeps the full USD 20,000: zero in India under Section 10(4D), zero in the UAE. The London resident redeems the same USD 20,000 gain and, after the UK annual exempt amount, pays UK capital gains tax at up to 24% on most of it, roughly USD 4,500 to USD 4,800, with no Indian tax credit to soften it because India took nothing. Same fund, same gain, and the tax outcome differs by the entirety of the UK liability purely because of where the investor is tax-resident. The exemption is not a property of the fund; it is a property of your residence.

The US-PFIC caveat that should stop most American NRIs

This is the part the GIFT City marketing machine is quietest about, and it is the most important single fact for the largest single group of NRI readers.

A GIFT City pooled fund is a foreign corporation that holds passive assets. Under US tax law that makes it a Passive Foreign Investment Company, a PFIC, and PFICs are taxed punitively for US persons. A US citizen or green-card holder owning units of the Tata retail fund, or any GIFT City AIF or mutual fund, must file Form 8621, and unless the fund supports a timely Qualified Electing Fund (QEF) election or you make a mark-to-market election, which the vast majority of GIFT City funds do not facilitate, you fall into the default Section 1291 regime. That means your gain and any "excess distribution" are taxed at the highest ordinary income rate regardless of your actual bracket, with an additional interest charge layered on for the years you deferred. In bad cases the effective rate on a long-held position runs above 40% before the interest charge.

Now compound it. The Indian exemption under Section 10(4D) means India collected nothing, so there is no foreign tax credit to offset that US bill. A US NRI in a GIFT City fund therefore gets the worst of both worlds: punitive PFIC taxation at home and no Indian tax paid to credit against it. Set that against a plain US brokerage holding a US-domiciled India ETF, where you pay ordinary US capital gains rates with none of the PFIC machinery, and the GIFT City route is simply worse for a US person on a pooled fund.

There is one workaround, and the 2025 rule change made it more reachable: a GIFT City PMS account. In a PMS you hold individual securities directly in your own name rather than units of a pooled vehicle, so there is no foreign corporation in the chain and PFIC does not apply. The minimum is the newly reduced USD 75,000. For a US NRI who genuinely wants GIFT City exposure and can fund USD 75,000, PMS is the structurally correct answer; for one who cannot, the conclusion is blunt. Avoid pooled GIFT City mutual funds and AIFs entirely, and get your India exposure through a US-domiciled vehicle instead. The cross-border fund-eligibility and PFIC overlay is covered in more depth in the mutual fund eligibility guide, and the US-domiciled ETF alternative in the index funds and ETFs guide.

What Budget 2025 actually extended

The Budget 2025 line that matters for individual NRIs is narrow but real: the sunset dates for IFSC tax concessions were extended to 31 March 2030, concessions that had been set to lapse variously in March 2024, 2025 and 2026. For you as an investor, this is reassurance rather than a new benefit. It means the Section 10(4D) fund exemption, the IBU concessions, and the deposit tax treatment you are relying on are not about to expire in the middle of a five-year holding period. Planning with a 2030 horizon is now defensible where before you were investing into a regime with a near-term cliff.

The more structural Budget 2025 change, the tax-neutral relocation of offshore funds, ETFs and retail schemes from Mauritius and Singapore into GIFT City effective 1 April 2026, is genuinely transformative but at the fund-sponsor level, not yours. It encourages AMCs to bring existing offshore India vehicles onshore to GIFT City, which over the next few years should widen the menu of retail funds available to NRIs. The benefit to you is indirect and lagged: more products, more competition on fees, better choice by 2027-28. It is not money in your pocket in March 2026.

Edge cases

OCIs and the FATF jurisdiction filter. The retail funds are open to NRIs and OCIs, but only from jurisdictions aligned with Financial Action Task Force standards. If you reside in a country on the FATF grey or black list, you may be turned away regardless of citizenship. Most readers in the US, UK, UAE and Canada are unaffected, but confirm before you assume access.

The outbound funds are a resident play sold to NRIs. The PPFAS S&P 500 and Nasdaq 100 FoFs and similar outbound vehicles are designed around the LRS route for resident Indians remitting rupees abroad. As an NRI you already hold foreign currency abroad and can buy a US index fund in your own home-country brokerage at far lower cost and with cleaner tax treatment. Routing US-index exposure through GIFT City as an NRI usually adds a layer of fees and cross-border reporting for no benefit. The outbound story is real, just not aimed at you.

The deposit beats the fund for conservative parking. If your goal is a safe USD home for cash you do not want to convert to rupees, the GIFT City USD fixed deposit at 4.5% to 6%, tax-free in India and TDS-free, is a stronger and simpler product than any GIFT City equity fund, and avoids the PFIC question entirely because a deposit is not a PFIC. Many NRIs reach for the fund when the deposit is what actually fits their need.

Retail fund track records do not exist yet. The Tata fund launched in September 2025. As of March 2026 it has roughly six months of live history. The structure is sound and the AMC is established, but anyone presenting a six-month-old feeder fund's early performance as evidence of anything is selling, not analysing. Judge it on structure and cost, not on a half-year chart.

The closing read

The honest read is that 2025-26 was the year GIFT City stopped being only an institutional centre and started being usable by individual NRIs, but the useful changes and the hyped changes are not the same list. The genuinely valuable shifts are video KYC, which removes the paperwork that killed retail interest; the USD 75,000 PMS minimum, which makes the only US-safe structure reachable; the USD deposits at 4.5% to 6% tax-free; and the first USD 500 retail fund as a low-friction entry for non-US residents. The hype is the USD 106 billion banking figure, the USD 77 billion AIF corpus, and the outbound funds, all real numbers that describe institutions and residents, not your situation.

So the recommendation, by residence. If you are a UAE resident, GIFT City is the most compelling it has ever been: the Tata retail fund or a deposit gives you legitimately tax-free India and global exposure end to end, and you should at least open an account now that video KYC makes it a 3 to 5 day exercise. If you are in the UK or Canada, treat GIFT City as convenient but not tax-advantaged; the deposit is worth it for USD parking, but the equity funds offer you no tax edge over a home-country approach, so do not pay a premium for the wrapper. If you are a US person, the default answer on pooled GIFT City mutual funds and AIFs is no, because PFIC plus no foreign tax credit makes them worse than a US-domiciled India ETF; the only GIFT City route that makes sense for you is a PMS account at USD 75,000, and only if you genuinely want active onshore exposure. For everyone, the deposit is underrated and the institutional numbers are irrelevant to your decision. If you are about to commit a large sum or you are a US person weighing PMS, that is the point to pay for cross-border tax advice rather than trust a fund brochure, this guide included.

Related guides

• GIFT City investing for NRIs: the full guide
• SEBI mutual fund rule changes 2026
• NRI investing in index funds and ETFs
• NRI mutual fund eligibility and the PFIC trap
• Capital gains tax for NRIs on Indian shares and mutual funds
• All News and analysis
• All Investments guides
• NRI banking guides

This guide is educational and general in nature, written as news analysis dated March 2026. It is not individual investment or tax advice. GIFT City, IFSCA and Budget rules are evolving, several provisions referenced here took effect in 2025 and 2026 and may change, and the US-PFIC treatment in particular depends on facts specific to your holdings and elections. Confirm your position with a qualified cross-border adviser and, for US persons, a US tax professional before investing.