The investment environment in the world has changed. To asset managers, venture capitalists, and other players in the private equity sector, the hunt to find a high-trust, low-friction jurisdiction has led many to the IFSCA Gift City.
The International Financial Services Centre (IFSC) in India has unveiled a disruptive change in the economics of fund management as we sail into 2026, in a new arrangement it calls Tax Reset.
The authority has provided a 20-year runway to international capital by extending the primary tax holiday, as well as simplifying the GIFT City Entity Setup Service.
This is not just another regulatory update to us as an expert GiftCityAdvisor, but a strategic repositioning of India as the most competitive fund management sanctuary in the world.
Future Outlook: The Tax reset of 2026
Traditionally, the IFSC units used to enjoy a 100 percent tax exemption for 10 years out of 15. Although competitive, this did not always fit the life cycles of the Private Equity or Venture Capital funds, which may take 12-15 years.
The IFSCA Gift City has brought a 20-year benefit under the new norm of 2026. All new entities are now eligible to enjoy a 100 percent tax holiday over a span of 25 years in a block of 25 years, with a leeway of 100 years. This gives the fund managers the rare chance to time their tax advantage to align with their highest exit and carry-interest years.
To international investors who are interested in establishing a firm in India, this is the final Operational Alpha fiscal certainty.
The Master Key to GIFT City Fund Management Set-Up
Establishing a fund within the IFSC will follow a two-step procedure, and you have to have your corporate identity and your regulatory license aligned to perfection. This is where the GIFT City Entity Setup Service collides with the Fund Management Entity (FME) framework.
1. Structure Selection: The correct legal vehicle is your Step Zero. Depending on your level of investment and capital investment, you can invest in:
- Limited Liability Partnership (LLP): It is the best option due to its flexibility and pass-through taxation advantages.
- Private Limited Company: It fits the large institutional fund managers.
- Foreign Branch: A smooth entry strategy to the Indian market by the well-established global asset managers without establishing a new subsidiary.
2. Unified Registration (MKY)
The GIFT City Fund Management Setup has changed forever with the introduction of the Master Key (MKY) system.
Rather than registering multiple applications to undertake various capital market activities, one now has the option to engage in Alternative Investment Funds (AIFs), offer investment advisory, and offer portfolio management services under a single umbrella.
Check it out!
Learn more about International Financial Service Centre (IFSC) Consulting and how GIFT City structures can unlock global investment efficiency.
IFSCA-C →The Advantage of the Power of the Alternate Investment Fund (AIF)
The IFSCA Gift City provides a powerful platform of Alternative Investment Funds resembling the flexibility of Luxembourg or the Cayman Islands, yet it is directly connected with the fastest-growing economy in the world.
- Category I and II AIFs: These are the workhorses of the IFSC, ideal with the Venture Capital, Private Equity, and Debt Funds. They enjoy a complete “Tax Neutrality of non-resident investors.
- Category III AIFs (Hedge Funds): These funds will be sophisticated, as they can use advanced hedging tools and leverage, which are often limited in the domestic Indian market.
Our GIFT City Entity Setup Service allows managers to ensure that their AIF is designed to meet the minimum capital requirement (as low as USD 75,000 for FMEs) and to optimize the value of foreign direct investment (FDI) channels.
Operational Immunity: The USD Factor
Currency risk is the most significant cross-border investment friction for UK or US-based fund managers. All the transactions, accounting, and capital calls of the international financial services centre are carried out in foreign currencies such as USD, EUR, or GBP.
This brings about Operational Immunity. Your fund will not be prone to fluctuations of the Rupee, and the capital can be fully repatriated instantly, without the complicated FEMA approvals.
In the case of the UK- India trade corridor that has already topped 47.4 billion USD, this USD-denominated environment is the key that the City of London needs to directly invest in Indian MSMEs and infrastructural projects.
Adherence and the GAP Audit Framework
High transparency leads to high trust. The IFSCA Gift City will retain the position of a high-end hub by exercising strict control. Every fund manager must also have a continuous net worth and a GAP Audit annually as well.
We do this compliance lifecycle on your behalf as your IFSC Consultant. Since the first SWIT portal filing through the filing of the annual Net Worth Certificate by the 30 th of September, we will keep your entity in Good Standing with the Authority.
It is this discipline of regulation that institutional LPs (Limited Partners) seek, who insist upon global standards of regulation.
Why Now? The 2026 Entry Window
The GIFT City has never had high momentum. Having a head start towards the quicker operationalisers is becoming the new head start, with more than one thousand already established, as well as a major reorganisation in tax laws.
Having opened your GIFT City Fund Management Setup today, you will be guaranteed a spot in an ecosystem that is eventually becoming a top-tier bank, custodian, and 35+ specialized FinTech units.
It is not a simple establishment of a fund; you are establishing another financial cluster in the world.
Need to Understand More?
Schedule a Free Consultation. Now!Conclusion: Your Legacy, Our Expertise
The process of establishing a fund in the international financial services centre india may be complicated, yet not necessarily sluggish. At GiftCityAdvisor, we are able to offer a solid regulatory understanding alongside a digital-first approach to GIFT City Entity Setup.
We know that to a fund manager, time that is spent on paperwork is time spent out of Alpha. We manage the SEZ approvals, the IFSCA licensing, and the compliance thereof, to allow you to concentrate on what you do best, expand capital, and create legacies.
The 20-year advantage is here. Are you ready to take it?
👉 Get in touch with GiftCityAdvisor to have your Fund Started today!
