Gift City and FinTechs Fuel India's next wave of global investment

The traditional Indian investment portfolio undergoes a transformation. A new generation of investors look beyond domestic assets and wants to expand their scope to global options, powered by a desire for diversification, a hedging against a depreciation rupee and easier access to the world’s leading businesses. This strategic shift forms the focus of ‘Mint Horizons’, a leading Masterclass series led by Neil Borate, editor of Mint Money, in his fifth session recently held in Ahmedabad. The event was attended by a hybrid mix of experienced investors and new ones and offered insights into the world of global markets. The latest issue of ‘Mint Horizons’ comes after successful expenses in Bengaluru, Delhi, Mumbai and Pune, and had a special focus on India’s International Financial Services Center (IFSC) in Gift City. The discussions during the event investigated how IFSC serves as a new gate for outgoing capital and how fintech platforms empower investors with the right tools to build a global portfolio. Gift City: Tree as a gateway to the world The opportunity has started with borates with insights in the global investment landscape and why Indians should diversify their portfolios to look beyond India. As this issue was held in Ahmedabad, the unique status of Gift City was brought to focus. Mihir Upadhyay, general manager, Department of Capital Markets, International Financial Services Centers Authority (IFSCA), talked about Gift City funds in a chat on fire. “To keep it simple, Gift City is a fence in India, but it can be treated as foreign from India. So, everything in Gift City is related to financial services,” Upadhyay said. This strategic positioning enables the IFSCA to measure its regulations against global financial centers such as Singapore, Mauritius, Hong Kong and Dubai, with the aim of attracting matters that were previously conducted from overseas locations. “Our competition really is not India, it is abroad,” he said, and the vision of “emphasizing” country abroad “and brought back India-related issues that moved to other financial centers. Gift City was allegedly devised after Prime Minister Narendra Modi saw many Indians in the financial services sector and provided for Indian investors during a visit to Singapore. The new regulatory framework, founded by the IFSCA in 2019, is designed to be principled and offers fund managers a clear set of rules. It has a conducive environment for both incoming funds (foreign money investing in India) and outgoing funds (Indian residents investing worldwide). Strategies and opportunities in the outbound investment The discussion has progressed to the rise of retail funds that helped democratize the global investment for Indian investors. In a panel discussion entitled “Outbound & Global Strategic”, experts have been seen investigating practical approaches to building a world portfolio. Jay Kothari, senior vice president, head investment strategist -Shares -Investments and World Head -International Affairs at DSP investment managers, talked about the strategy deployed by the fund that has a minimum investment of $ 5,000. “If you look at Indian market cap, which is about $ 5 billion, you are only 4% of the global market cap. So, you still have 95% to invest. And the correlation of India versus Globe is very low at 30-50%,” he said. He also shared insights into the fund’s universe of investment, which includes a diverse range of businesses and sectors. “Whether it’s an internet game in the consumer, such as Amazons or PDD, or athleisure brands such as Puma, Nike or Lululemon,” he said. The portfolio also contains pure-play electrical vehicles (EV) such as BYD and key players in the global payment system such as MasterCard and Visa. Kothari added that the fund is underweight on the US market and overweight on Europe and Asia, which he believes drives greater value. Ankita Pathak, Macro strategist and the Global Equities Fund Advisor at Ionic Asset, a firm with a non-retail AIF license, offered a supplementary perspective. Her firm’s strategy focuses on ‘innovation stations’, such as companies working in domains of cyber security and cloud computing, supporting the growth of artificial intelligence (AI). She said that her fund is looking for firm finances, not just hype: “We have never touched a Tesla in our lives, and we have four and a half percent in ate.” Definition of returns, the allocation of assets and the Masterclass have also tried to answer questions from the audience, providing further insights into the global investment landscape. An investor from the audience asked, ‘I don’t care where you invest. What I care about is the return. Is 33% of my portfolio in mutual funds and 66% in real estate a good strategy? And when do I go out? ‘Kothari and Pathak offered a rounded response. “There is no right answer, because based on your kind of temperament and your life goals, this answer will change,” Kothari said. The real power of investment, he added, lies on time. “What makes you make the maximum money is not just the returns … The more your time will be put together.” Ankita expanded on this and emphasized the strategic value of building a dollar corpus by India’s Liberalization Scheme (LRS). She calls a scenario of an Indian client who had the wealth, but whose son was settled abroad and did not want to return to India. The customer has set up a company abroad and a ready pool of dollars built over the years has enabled them to finance the business without being limited by the annual $ 2,50,000 LRS cap. This has shown that the value of global investment is beyond fair returns, which serves as a hedging against future needs such as overseas education or relocation. “Leaving an outgoing fund before two years doesn’t make sense,” she says, pointing out the need for a long-term attitude. The rise of DIY investing the last leg of the master class has put the spotlight on the role of technology in empowering individual investors. Shubh Motulus, founder and CEO of the FinTech platform, appreciates the do-it-yourself (DIY) approach to investment abroad. He felt that the traditional obstacles such as lack of awareness, lack of access, high costs and boring paperwork are no longer relevant in today’s landscape. ‘If you were to download the valuation app, you could be on board within three minutes, and you can complete a transaction in about 15 seconds, fully digitally, from end-to-end. Thanks to our regulators and IFSCA, who made a part of this, ‘he said. He added that the platform also made it exceptionally cost-effective, with Forex fees on or below 1% and transaction costs in single-digit calls. He also talked about a general concern that investors have on their minds – the chance of a US market swing. Motus believes that a bear market in the US was likely to affect the rest of the world, and that the depth of the US market offers enough opportunities, even in a downturn. He mentions historical data that shows that the US has led innovation since the 1950s, not only in AI and technology, but also in biotechnology, robotics and genetics. He offered advice to investors looking for easy exposure and said: “You have significant stocks and ETFs covering emerging markets. So, if you really want to expose emerging markets, you can actually do this through a lot of ETFs already leading index leaders or thematic portefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefefeftate wil hê.” Taxes, fees and future prospects The session also addressed concerns and practical questions about tax and bank charges. Kothari has made it clear that the US estate duty applies more to shares and not to the funds. He talked about bank charges and said the issue of unfavorable exchange rates, but mentioned that the digital platforms developed would significantly reduce these costs. For individual investors, mature has noted that capital gains are taxed on a manageable 12.5% on international investments after a two-year holding period. The event concluded at an optimistic note. Upadhyay has encouraged investors to learn more about the offer of Gift City and his dedication to becoming a top global financial center. “I would say it’s a long journey we just started. The growth was good to begin with in the last four years, with the number of entities registered, but we just weren’t even touched, ‘he said. In total, with the right tools and knowledge, Indian investors are now well equipped to build global diversified portfolios. Note to readers: Mint Horizons Ahmedabad edition is presented in partnership with appreciation.