India’s ultra-wealthy are finding creative ways to sidestep regulatory roadblocks that have hampered overseas investments from single-family offices (SFOs) set up at GIFT City.
Despite the establishment of several SFOs at the International Financial Services Centre (IFSC), uncertainty remains around how their global investments should be categorised — under the Overseas Portfolio Investment (OPI) route or the Overseas Direct Investment (ODI) route. This distinction matters: ODI typically covers investments made from India into GIFT City, while global asset allocations by family offices fall under OPI. However, entities can’t operate both routes in parallel, resulting in a regulatory impasse.
As a result, no SFOs at GIFT City have yet been able to execute foreign investments — despite regulatory approvals being granted to over a dozen families.
In response, several wealthy families — including those from the automotive, manufacturing, and tech sectors — are banding together to create pooled investment structures modelled on Alternative Investment Funds (AIFs). While formally unified, these funds are split internally, with families informally carving out separate portfolios and returns. Investments are made under a shared fund umbrella, but allocated behind the scenes.
This workaround allows family offices to bypass restrictions placed on individual SFOs, leveraging AIF-style entities for outbound investment activity. These structures are not without risk, however, and rely heavily on informal agreements in the absence of regulatory clarity.
The Reserve Bank of India (RBI) has previously raised concerns that family offices might be used to bypass annual remittance limits under the Liberalised Remittance Scheme (LRS), which caps overseas transfers at $250,000 per individual. Talks between the RBI and the IFSCA have yet to yield a concrete resolution, prompting families to adopt these temporary, multi-family-style setups.
So far, only one GIFT City-based family office — backed by a prominent Indian industrialist — has been granted permission to invest overseas, reportedly as a test case. That office is said to have committed to repatriating capital for philanthropic use.
For now, the AIF workaround offers a holding pattern — a compliant, if imperfect, stopgap until regulators provide a clearer pathway for direct international investments by Indian family offices.
