Background

In recent years, the Indian government has made significant strides toward enhancing the operational framework of the International Financial Services Centre at Gujarat International Finance Tec-City (“GIFT-IFSC”). GIFT-IFSC was established with an aim to redirect all financial transactions conducted by residents in foreign financial centres to India. By virtue of RBI circular[1] titled ‘Operational guidelines on International Financial Services Centre (IFSC)’ dated March 31, 2015, GIFT-IFSC is deemed as an offshore jurisdiction under the Foreign Exchange (Management) Act, 1999. However, due to the restrictive nature of the Liberalised Remittance Scheme (“LRS”), there were not many GIFT-IFSC products marketable to Indian residents. In order to cement the status of GIFT-IFSC as a viable financial centre for Indian residents and pursuant to feedback received from various stakeholders, the Reserve Bank of India (“RBI”) vide a circular dated July 10, 2024 (“LRS Circular”) permitted Indian residents to remit money to GIFT-IFSC for all permissible purposes under the Master Direction- Liberalised Remittance Scheme, 2016[2] (“LRS Master Direction”). Detailed analysis on the LRS Circular and its implications on GIFT-IFSC can be found here.Continue Reading GIFT-IFSC and LRS- Insurance Products for Resident Indians?