When we started evaluating domicile options for our latest fund, the conversation felt materially different from the ones we had during earlier vintages. In 2015, we were raising a USD 15 million fund. In 2020, that became USD 75 million. This time, as we prepared to launch a USD 135 million fund and engage a broader pool of international institutional investors, the question of fund domicile moved from being a structural consideration to a strategic one.

This wasn’t just a fund launch. For us, it was a statement about who we wanted to be as fund managers in the eyes of global institutional limited partners (LPs). For a fund like ours, historically investing through a domestic structure, jurisdiction is not just an administrative checkbox. It is an extension of your fiduciary identity.

As we explored the architecture for our first offshore feeder, we spent considerable time evaluating the available options. The objective was straightforward: identify a structure capable of accommodating different investor tax profiles, while providing durable governance, efficient capital deployment and long-term regulatory certainty. The conclusion was not immediate. Nor was it obvious. But after a detailed evaluation, we chose to establish our offshore feeder in GIFT City.

Why GIFT Emerged as the Preferred Option

• Cayman Islands
  Cayman offered investor familiarity and structural flexibility. However, increasing emphasis on economic substance and evolving perceptions around offshore centres required careful consideration.While still a widely accepted domicile, we were mindful of how those conversations may evolve over the life of a long-term fund.
• Singapore
  Singapore brought regulatory certainty, treaty credibility and deep institutional acceptance. It remains one of the strongest fund management jurisdictions globally. The trade-off is a significantly higher operating cost base and less direct integration with theIndian market.
• Mauritius
  Mauritius has historically played an important role in India-focused investing. However, changes to treaty arrangements have reduced some of the predictability that once underpinned structuring decisions. For long-duration vehicles, certainty often matters as much as efficiency.
• Delaware
  Delaware remains a preferred jurisdiction for many US institutional investors and benefits from a well-established legal framework. For an India-focused strategy, however, introducing another intermediary layer between investors and the underlying market did not appear to create sufficient advantages to justify the additional complexity.
• GIFT City (IFSC)
  What appealed to us was not simply the tax framework, although that was certainly relevant. Nor was it solely the regulatory positioning. The attraction was the ability to build an offshore structure within a framework directly aligned with India’s financial architecture while still operating within an international financial services environment. The combination of foreign-currency flexibility, a dedicated IFSC regulatory framework and tax incentives created a compelling foundation.
  Particular attention was also paid to the treatment of management fee income. The availability of a concessional tax regime for eligible IFSC business income, including an extended 20-year tax holiday framework, was an important consideration in our analysis.

After assessing investor composition, governance requirements, operating economics, tax durability and long-term strategic alignment, GIFT City emerged as the most coherent choice for where we believe both our platform and the broader Indian capital ecosystem are heading.

What We Found on the Ground

Before making the decision, most of our understanding of GIFT City came from policy papers, presentations and conversations with advisors. As is often the case, the view from a conference room and the view on the ground were not entirely the same. Over successive visits, what surprised us was not the infrastructure itself, although that has developed considerably. It was the extent to which the broader ecosystem had already begun organising around it. Trustees, custodians, banks, administrators, legal advisors and tax professionals have all built dedicated IFSC practices. More than 200 Fund Management Entities are now operating from the jurisdiction.

 At a certain point, ecosystem development becomes self-reinforcing. Talent starts moving. Service providers deepen capabilities. Market participants are more comfortable engaging with the jurisdiction.

That is not to suggest that every challenge has been resolved. It hasn't. But the conversation is gradually shifting. Increasingly, the question is not what GIFT might become. It is whether the market has fully appreciated what it has already become.

The Practical Realities of Operating in GIFT

One of the lessons from our own process is that enthusiasm and realism must coexist. The opportunities are real. The operational demands are real as well. Managers evaluating GIFT should enter the process with a clear understanding of both.

• Regulatory Complexity
  An IFSC structure sits at the intersection of multiple regulatory regimes. IFSCA regulations interact with the SEZ framework, FEMA, the Companies Act, GST provisions and Indian income tax law. Interpretational friction emerges when these frameworks overlap. A more integrated single-window mechanism across the relevant departments would meaningfully improve execution efficiency.
• SEZ Compliance
  One practical aspect that is often underestimated is the compliance burden associated with SEZ requirements. At present, both the Fund Management Entity and the fund vehicles themselves are treated as separate SEZ units. This necessitates multiple registrations, separate import-export codes and parallel compliance processes. While these are not unmanageable, it does add time, cost and administrative complexity that managers should factor into their planning.
• Tax & Transfer Pricing
  Where an IFSC manager operates alongside an onshore affiliate, transfer pricing considerations become particularly important. Management fee arrangements must withstand arm’s-length scrutiny and should be structured accordingly from the outset. In our experience, this is not an area where shortcuts are advisable. Thoughtful structuring and high-quality tax advice are investments rather than expenses.
• Talent Availability
  The ecosystem continues to grow, but talent depth remains a work in progress. Experienced professionals across fund administration, compliance, risk management and specialised operational functions are available, though the pool remains relatively limited compared with more established global centres. As a result, competition for experienced talent can be intense and compensation expectations reflect that reality.
• Operational Infrastructure
  Operational frameworks continue to evolve alongside regulatory requirements. IFSCA’s move towards dematerialization is a positive development, but implementation processes are still maturing. At present, the Registrar and Transfer Agent ecosystem remains concentrated, with only one fully operational provider available. Managers should therefore plan carefully around service provider dependencies and operational contingencies.
• FEMA, Currency and Capital Account Considerations
  Perhaps the most important lesson for first-time entrants is that fund flow architecture should be designed deliberately and early. Although GIFT operates within an international financial services framework, FEMA considerations remain highly relevant in practice.Capital account convertibility is not absolute. Subscription flows, outbound investments, unit denomination, repatriation mechanics and participation by Indian resident investors must all be assessed carefully within the applicable RBI framework. These issues are manageable, but they are foundational. They are best addressed during structuring rather than after launch.
• Substance & Governance
  If there is one theme that consistently runs through the entire GIFT framework, it is substance. Economic substance is not treated as a box-ticking exercise.Nor should it be. Structures built primarily around contractual positioning without corresponding operational depth are unlikely to age well. For managers accustomed to jurisdictions where service infrastructure is deeply embedded and readily available, this requires a different mindset. GIFT rewards institutions that are willing to invest in genuine operating capability.

Our view is that managers who prioritise building their operating capability will be laying the groundwork for a durable long-term moat.

Our Operating Philosophy

From the beginning, we made a conscious decision not to approach compliance as a periodic exercise.

We appointed both a dedicated Compliance Officer and Principal Officer within the IFSC structure and invested early in governance architecture. More importantly, we sought to integrate compliance, tax and regulatory engagement into the normal operating rhythm of the platform rather than treating them as annual events. That approach requires effort, but it also creates institutional discipline.

For managers willing to engage with the framework substantively, the complexity is manageable. In some respects, it can even be beneficial because it encourages governance standards that sophisticated investors increasingly expect.

What the Industry Needs

No financial centre reaches maturity without iterative refinement.Several areas would benefit from continued evolution:

• Greater coordination across regulatory touch-points
• Streamlined SEZ-related compliance requirements
• Deeper talent pools across specialised functions
• Broader participation from service providers

Encouragingly, many of these conversations are already taking place. One development we view positively is the growing discussion around establishing a dedicated industry association representing Fund Management Entities within the IFSC ecosystem. As participation grows, coordinated engagement between managers and regulators becomes increasingly valuable.

Equally important has been our experience interacting with IFSCA itself. Throughout the process, we found the regulator accessible, pragmatic and willing to engage with market participants. For a relatively young financial centre, that openness to dialogue is a meaningful advantage.

Final Thoughts

Rome wasn’t built in a day, and neither are global financial centres.

Our experience with GIFT City has been broadly consistent with that reality. The ecosystem is not finished. It is continuing to evolve. Yet the direction of travel is becoming increasingly clear. We entered the process with cautious optimism and a reasonable degree of scepticism. We completed it with greater conviction than we expected. We, at Inflexor, believe that the underlying foundations of GIFT City are stronger than many observers appreciate.

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