Diaspora Investments Surpass $7 Billion in India’s GIFT City

Investments by the Indian diaspora in funds based in the GIFT City have exceeded USD 7 billion, according to K Rajaraman, chairman of the International Financial Services Centres Authority (IFSCA). This significant milestone was announced on Tuesday during an event hosted by the Institute of Internal Auditors.

Remittances Surge as NRIs Invest in Funds

In 2024 alone, non-resident Indians (NRIs) and people of Indian origin remitted over USD 129 billion to India. Rajaraman stated that it is reasonable to assume that these individuals have made investments in global markets of a similar magnitude.

“As of now, about 5,000 NRIs have invested nearly USD 1.5 billion in various banking products. They have also contributed close to USD 7 billion in the fund ecosystem,” he highlighted.

GIFT City: An Attractive Destination for Diaspora Funds

Established in 2024, dedicated facilities have been set up to attract diaspora investments into GIFT City located in Gujarat. Rajaraman emphasized that the Indian diaspora, which consists of over 19 million people, represents a significant pool of potential funds.

“The thought process is to create a platform that provides alternate investment opportunities for NRIs abroad. Many send money to India to be saved or invested in rupee terms, but GIFT City offers an opportunity in foreign exchange terms as it operates as a complete foreign exchange territory,” he explained.

Reforms and Future Aspirations

Rajaraman mentioned that amid increasing calls for reforms, necessary measures should be implemented within the next three to five years. These adjustments are essential as India aims to be recognized as a developed nation by 2047.

The IFSCA is committed to playing its part by studying the best practices of financial centers around the globe, an effort that will help pave the way for India’s financial future.

Expanding Financial Footprint in GIFT City

Currently, the assets under management for the 30 banks operating in GIFT City, including 15 international banks, have surpassed USD 78 billion. Notably, Indian corporates have borrowed approximately USD 50 billion from these banks.

Without disclosing names, Rajaraman referenced a recent request for proposal from a major Indian corporate house seeking to borrow USD 3 billion.

Diversifying Beyond Finance

While the focus has largely been on finance, IFSCA’s executive director Dipesh Shah revealed that GIFT City is also targeting other sectors, such as aviation and shipping. Indian companies are increasingly looking to acquire or lease assets internationally.

Currently, there are 33 aircraft leasing firms registered in GIFT City, with 198 aviation asset leases completed to date. Additionally, ship leasing is quickly becoming a viable option.

Identifying Internal Control Challenges

During the event, banking industry veteran K V Kamath noted that many startup founders fail due to their neglect of internal controls. He emphasized that while founders often concentrate on business opportunities and technology, the importance of internal controls becomes evident only after setbacks.

Kamath shared his experience at ICICI Bank, where empowering employees led to nearly 1,000 individuals launching their own ventures, advising entrepreneurs to prioritize establishing internal controls from the outset.

Emerging Risks and the Role of Internal Audit

Furthermore, a survey involving over 220 internal auditors, conducted by the Institute in collaboration with Protiviti India, revealed that two-thirds of chief audit executives consider artificial intelligence, bots, and cybersecurity as major risks for their organizations.

Only 16% of respondents felt fully prepared to proactively identify and mitigate emerging risks, while 58% rated their preparedness as moderate.

Call to Action for Internal Audit Leaders

“Internal audit must lead the charge by harnessing advanced analytics to uncover hidden risks, accelerating digital adoption, and fostering tech-driven ecosystems,” urged Puneet Gupta, managing director at Protiviti India.

Urgent Need for Governance Frameworks

Anthony Pugliese, president and CEO of the Institute of Internal Auditors, echoed the sentiment that gaps in governance and expertise remain. He highlighted the pressing need for organizations to reinforce their risk frameworks and invest in digital readiness.

Conclusion

The significant investments by the Indian diaspora in GIFT City highlight the potential of this financial hub. With continued reforms and a focus on diversifying into various sectors, GIFT City is well positioned to attract even more investments in the future.

FAQs

1. What is the total amount invested by the Indian diaspora in GIFT City-based funds?
Investments have crossed USD 7 billion.

2. How much have NRIs remitted to India in 2024?
NRIs and people of Indian origin remitted over USD 129 billion to India in 2024.

3. What are some sectors besides finance that GIFT City is focusing on?
GIFT City is also exploring sectors like aviation and shipping.

4. How many aircraft leasing firms are registered in GIFT City?
There are currently 33 aircraft leasing firms registered in GIFT City.

5. What percentage of chief audit executives feel prepared to address emerging risks?
Only 16% of them believe they are highly prepared to proactively identify and address emerging risks.

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