GIFT IFSC fund registrations, investor base hit new highs; outbound flows steady
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While fund registrations and investor commitments surged through the October–December quarter, outbound capital deployment from the IFSC remained restrained
GIFT IFSC fund registrations, investor base hit new highs; outbound flows steady
- GIFT City IFSC registrations crossed 1,100 by December 2025
- Fund management entities rose over 50 percent from 2023 levels
- Outbound investment stayed flat despite rapid fund growth
GIFT City’s capital markets ecosystem continues to gain traction, with total registrations under the International Financial Services Centres Authority crossing the 1,100 milestone for the first time by December 2025, nearly doubling from levels seen in late 2023. Registrations rose steadily through the year, from 865 in March 2025 to 939 in June, before accelerating in the second half.
Beneath the headline growth, however, the data points to a more deliberate sequencing underway at India’s offshore financial centre. While fund registrations and investor commitments surged through the October–December quarter, outbound capital deployment from the IFSC remained restrained.
Fund infrastructure scales rapidly
The number of registered Fund Management Entities crossed 200, up more than 50% from 2023 levels, while total schemes moved past 300. Over the same period, cumulative non-retail commitments climbed to USD 32.13 billion, with funds raised reaching USD 17.34 billion, both recording sharp increases over the past two quarters.
Category III AIF participation — typically linked to hedge-fund strategies and global trading mandates — emerged as one of the fastest-growing segments. The number of registered Category III investors rose to 3,257 as of December 2025, from 2,559 in September, and nearly 1.7 times higher than late-2023 levels, the bulletin shows.
Outbound balances stay flat
Yet this expansion in fund infrastructure did not translate into a corresponding rise in outbound balances. Outstanding overseas direct investment routed through IFSC banking units declined to $878 million in December, from about $1.1 billion at the end of September, and remains broadly unchanged from levels seen two years ago.
Industry experts suggest that managers were mostly busy building offshore capability ahead of deployment, towards the end of the year. Rather than chasing flows in an uncertain global environment. In their words, “Structures are getting ready, but capital is waiting for better visibility.”
Capital markets depth before risk
Where activity did scale meaningfully was in capital markets and balance-sheet-led businesses. Cumulative debt raised and listed on IFSC exchanges reached $68.03 billion as of December 2025, with $1.42 billion of fresh listings during the quarter alone.
Trading liquidity also remained robust. Average monthly turnover on IFSC stock exchanges stood at USD 91.44 billion during the October–December period, broadly in line with levels maintained through much of 2025. The stability of turnover — without sharp volatility-driven spikes — points to institutional, flow-led activity rather than speculative risk-taking.
Banking units continued to anchor the ecosystem, with growth concentrated in treasury operations, interbank placements and trade finance rather than outbound portfolio risk. While the bulletin does not disclose granular treasury balances, the contrast between steady banking activity and flat ODI levels suggests IFSC usage is skewing towards financial plumbing and liquidity management at this stage.
A contrast two years in the making
The contrast with 2023 is telling. Two years after IFSC fund frameworks began scaling in earnest, the data shows fund entities, investor registrations and commitments have grown rapidly, while outbound investment balances have remained broadly flat. The gap highlights a market still in preparation mode — building optionality rather than chasing immediate offshore exposure.
Macro conditions played a role. Through much of 2024 and 2025, global rates stayed elevated, currency volatility remained episodic, and domestic Indian markets continued to attract capital. At the policy level, the capital-account stance of the Reserve Bank of India remained cautious, reinforcing a measured approach to outward flows.
What fund managers are now watching is whether policy tailwinds translate into deployment. The Union Budget 2026 extended the tax holiday for IFSC units to 20 consecutive years out of 25, and introduced a concessional 15% tax rate thereafter — a move aimed at improving long-term visibility for offshore structures housed in GIFT IFSC.
Separately, IFSCA’s recent rollout of the “Master Key” framework, which allows a single registration to cover multiple capital market activities, is expected to lower operational friction for fund managers and intermediaries looking to scale across strategies.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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