Government Sources Clarify: Modification of code No Ban on Domestic Family offices to set up Investment funds Many invest in GIFT City.
As per reliable government sources, contrary to recent enthusiasm on social media and news reports, domestic family offices in the country are not barred from having investment funds in GIFT City. Are there restrictions according to any regulatory body on family offices in establishing the funds in this fast-growing financial center? As per the information emerging late Friday, there is officially no restriction on family offices regarding the establishment of funds in this financial center.
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Understanding the Regulatory Framework:: Lastly, there is no problem with domestic investments
The above-mentioned government source mentioned that “all the persons, who are residents in India, are free to make Overseas Direct Investment under automatic route. It’s permitted that Indian entities can use up to 400% of their net worth and individuals can transfer US $ 250,000 in one financial year for overseas direct investment. This flexibility also applies to Funds incorporated within India or Investment funds or vehicles such as AIF, VCF, etc. It is to be noted that these entities are permitted to invest overseas under the Overseas Portfolio Investments (OPI) route without obtaining prior permission from the regulators.
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The clarification arrived on the backdrop of a spirited debate on the social networking site, Twitter where some people have alleged that Indian regulators are not allowing local family offices to establish investment funds in GIFT City. These assertions pointed to the fact that the government had its gut feeling on facets of tax evasion and avoidance of capital controls through such financial structures.
Industry Voices Raise Concerns: What Are the Implications of the Findings of the Study?
Some of the key people in the industry like Mohandas Pai, who was the former CFO of Infosys, have also voiced their worries over this gossip. Pai even went to the extent of writing to the Prime Minister himself a note, Commenting that such sentiments could deter foreign investors from investing in India. Some of the media houses took it to another level by conducting research based on these social media allegations thus adding salt to injury.
Conclusion: That’s the problem: No restrictions, but lots of misinformation
Interestingly, would-be investors need to know that there is no ban on domestic family offices from establishing funds in GIFT City. Very often the recent conversation on social media appears to be not only louche but based on misconceptions and misinterpretations of changes in regulations. These rumors should be cleared by the government and enhance the confidence of the investors in the investments available in GIFT City.
