No regulator has stopped domestic family offices from setting up mutual funds in GIFT City, government sources clarified late Friday night. “All eligible Indian residents are allowed to make foreign direct investments through the automatic route,” a source said. Indian companies, for example, can invest 400 percent of their net worth and individuals can remit up to $250,000 in a financial year.
Similarly, investment funds or vehicles established in India such as Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs) are permitted to make foreign investments in the form of Overseas Portfolio Investments (OPI) under the automatic mechanism.
The clarification comes in the wake of a recent social media debate claiming that Indian regulators had stopped allowing local family offices to set up mutual funds in their new financial hub over fears that these arrangements could be misused to evade taxes and capital controls.
Former Infosys CFO Mohandas Pai brought one such tweet to the government’s attention and urged the Prime Minister to intervene as such moves could hamper global investments. Some media houses also published reports on the same, citing the tweets.
First published: August 23, 2024 | 10:32 p.m. IS
