Investing abroad via MFs: cap the investor, not the industry
The second route is through GIFT City, the Gujarat International Finance Tec-City, an 886-acre enclave near Ahmedabad that counts as offshore for financial transactions. Under the Liberalized Remittance Scheme (LRS), any Indian can send up to $250,000 a year abroad, including into dollar-denominated funds that some asset management companies (AMCs) have launched in GIFT City. This route has its own regulator and isn’t bound by the $7 billion ceiling. A few months ago, I wrote approvingly about it, and I still think a large investor should understand it. But it is not a route for someone who wants to start a ₹5,000 SIP. The minimum is usually $5,000, the all-in cost of some feeder funds is close to 3%, and anything above ₹10 lakh a year attracts a 20% TCS (tax collected at source), which blocks your money even if it’s eventually credited back.
