Portfolio Management Services (PMS) in GIFT City – Complete Guide

Last Updated on: 30th September 2025, 02:57 pm

Introduction

Portfolio Management Services (PMS) are structured investment solutions designed for individuals and institutions seeking personalized wealth management beyond traditional mutual funds. Unlike pooled retail products, PMS provides tailored strategies where a portfolio manager actively manages securities on behalf of investors, aiming to maximize returns while mitigating risk.

In India, GIFT City (Gujarat International Finance Tec-City) has emerged as a global financial hub under the International Financial Services Centre (IFSC). Established to rival financial hubs like Singapore and Dubai, GIFT City IFSC provides a seamless environment for cross-border financial services, with world-class infrastructure, tax incentives, and a progressive regulatory framework governed by the International Financial Services Centres Authority (IFSCA).

Why PMS in GIFT City is gaining traction:

• Tax efficiency: No securities transaction tax (STT), commodity transaction tax (CTT), or dividend distribution tax (DDT) within IFSC; capital gains exemptions for eligible securities.
• Global reach: Investors can access foreign currency denominated investments and global markets from India.
• Regulatory ease: Streamlined compliance under IFSCA (Fund Management) Regulations, 2025 with lower friction compared to domestic PMS.
• Growing adoption: In 2024, IFSCA reduced the minimum investment for PMS in GIFT City from USD 150,000 to USD 75,000 (approx. ₹65 lakh) making PMS more accessible for HNIs, NRIs, and family offices.
  

What is Portfolio Management Services (PMS)?

Definition and Scope

Portfolio Management Services (PMS) is a professional financial service where a licensed portfolio manager manages equity, debt, or hybrid portfolios on behalf of clients. PMS offers:

• Customization: Tailored investment strategies to match client’s financial goals, risk appetite, and liquidity needs.
• Active management: Unlike passive pooled funds, portfolio managers actively make buy/sell decisions.
• Transparency: Investors hold securities in their own demat accounts, ensuring ownership visibility.
• Performance orientation: PMS often targets higher returns than mutual funds, albeit with higher risk.

Types of PMS

1. Discretionary PMS

• The portfolio manager has complete authority to manage investments.
• Suitable for clients who prefer professional autonomy.
• Example: A discretionary PMS provider may allocate 70% to equities and 30% to debt based on market outlook.
  

2. Non-Discretionary PMS

• Portfolio manager provides recommendations, but execution requires client approval.
• Ideal for investors who want control in final decisions.
• Example: Manager suggests exiting a stock, but client decides the timing.
  

3. Advisory PMS

• The manager acts purely as an advisor, without executing trades.
• Investor retains complete control over transactions.
• Useful for experienced investors who need research-backed advice.
  

Structure of PMS in GIFT City

Overview of PMS Structure under IFSCA

Portfolio Management Services (PMS) in GIFT City IFSC are organized under the IFSCA (Fund Management) Regulations, 2025, which lay down a flexible framework for setting up, managing, and operating PMS entities. The structure is designed to allow domestic HNIs, NRIs, and foreign investors to access Indian and international markets through a globally compliant, tax-neutral system.

At a high level, the PMS structure in GIFT City consists of:

1. PMS Entity – licensed with IFSCA, incorporated as a Company or LLP in GIFT City.
2. Portfolio Manager – responsible for strategy, execution, and compliance.
3. Custodian – mandatory appointment to safeguard investor assets.
4. Bank Account – can be opened in USD, or other permitted currencies.
5. Investor Accounts – separate demat accounts in the name of each investor for transparency.

Organizational Structure of a PMS Provider in GIFT City

Layer	Function in PMS Structure	Regulatory Requirement (IFSCA)
Entity Setup	Company/LLP incorporated in GIFT IFSC	Must apply for PMS license
Portfolio Manager	Licensed individual/team managing investments	Fit & Proper criteria + Net worth norms
Custodian	Safeguards investor securities	Mandatory appointment
Banking Partner	Facilitates foreign currency accounts	GIFT City IFSC banks only
Compliance Officer	Ensures adherence to IFSCA rules	Reporting & disclosure obligations
Investor Accounts	Separate demat accounts under investor’s name	Full transparency mandated

Key Features of PMS Structure in GIFT City

• Segregated ownership: Unlike mutual funds, securities remain in the client’s demat account, ensuring visibility and control.
• Global flexibility: PMS can manage multi-currency portfolios, including overseas securities, subject to IFSCA rules.
• Minimum investment threshold: As of today, investors can participate with USD 75,000 (~₹65 lakh) instead of the earlier USD 150,000.
• Unified regulation: The entire PMS setup reports to IFSCA, reducing compliance duplication.
• Professional governance: Requirements for qualified fund managers, minimum capital, and periodic reporting ensure transparency.

PMS Workflow in GIFT City – Step by Step

1. Investor Onboarding – KYC and eligibility checks (HNIs, NRIs, FPIs, family offices).
2. Account Setup – Opening of a separate demat account and foreign currency bank account.
3. Portfolio Allocation – Based on investor profile (equity, debt, alternatives, global securities).
4. Execution & Custody – Trades executed by the PMS entity; assets held with a custodian.
5. Reporting & Disclosure – Periodic performance reports, risk disclosures, and compliance filings with IFSCA.

Who Can Invest in PMS in GIFT City?

• Residents: Indian citizens meeting eligibility criteria.
• NRIs: Key beneficiaries, as PMS in GIFT City provides tax incentives and USD denominated structures.
• Foreign investors & FPIs: Can directly invest via GIFT IFSC entities.
• Family offices: Can consolidate global investments under one umbrella structure.
  

PMS vs Mutual Funds – Key Differences

Feature	PMS in GIFT City	Mutual Funds (India)
Structure	Individually managed portfolios	Pooled funds managed collectively
Ownership	Securities held in client’s demat account	Units allotted in proportion to investment
Customization	High – tailored per client’s objectives	Standardized schemes, no individual customization
Regulation	IFSCA (Fund Management) Regulations, 2025 (for GIFT City PMS)	SEBI (Mutual Fund) Regulations, 1996
Minimum Investment	USD 75,000 (≈ ₹65 lakh) – reduced in 2024	As low as ₹500 for SIPs
Transparency	Direct ownership of securities, real-time tracking	NAV-based tracking only
Target Audience	HNIs, NRIs, foreign investors, family offices	Retail and mass investors

Key takeaway: PMS in GIFT City bridges global wealth management with India’s IFSC advantage—offering customization, tax benefits, and global access unmatched by traditional mutual funds.

Why GIFT City for PMS?

Overview of GIFT IFSC Ecosystem

GIFT City (Gujarat International Finance Tec-City) is India’s first International Financial Services Centre (IFSC), created to compete with hubs like Singapore and Dubai. It offers a globally benchmarked financial ecosystem, bringing together banking, capital markets, insurance, fintech, and wealth management within a tax-neutral zone.

• Strategic location: Situated in Gujarat between Ahmedabad and Gandhinagar.
• Unified regulator: The International Financial Services Centres Authority (IFSCA) oversees all financial services, ensuring streamlined compliance.
• Growing ecosystem: As of 2025, 700+ financial entities are registered in GIFT City IFSC, including PMS providers, AIFs, fintech startups, and global banks.
• Global focus: GIFT City allows foreign currency transactions (USD, GBP, EUR, etc.), making it easier for NRIs and foreign investors to participate.

Benefits of Setting Up PMS in GIFT City

1. Liberalized Regulatory Environment

• PMS in GIFT IFSC operates under IFSCA (Fund Management) Regulations, 2025, which are designed to provide greater flexibility than SEBI’s onshore PMS framework.
• One-stop compliance: Portfolio managers can operate cross-border seamlessly without navigating multiple Indian regulators.
  

2. Tax Benefits – Neutral & Investor-Friendly

• No STT (Securities Transaction Tax), CTT (Commodities Transaction Tax), or DDT (Dividend Distribution Tax).
• Capital gains exemption for securities traded on IFSC exchanges.
• Tax neutrality: Both foreign and domestic investors enjoy reduced tax friction compared to onshore PMS.
• Example: An NRI investing through GIFT PMS avoids double taxation that would otherwise apply onshore.
  

3. Access to Global Investors & Foreign Capital

• GIFT PMS structures can attract investments from NRIs, FPIs, and foreign institutions.
• Ability to create USD-denominated portfolios for cross-border wealth management.
• Opens the Indian market to family offices and institutional investors worldwide.
  

4. Ease of Currency Convertibility

• PMS in GIFT City can operate in USD or INR, unlike onshore PMS which are restricted to INR.
• Smooth capital inflows and repatriation for NRIs and foreign investors.
• Supports multi-currency accounts and hedging mechanisms.
  

5. Lower Compliance Burden Compared to Onshore PMS

• Unified oversight by IFSCA reduces duplication of reporting.
• Fewer operational restrictions compared to SEBI-regulated PMS in India.
• International standards of reporting and accounting, enhancing investor confidence.

Quick Snapshot: PMS in GIFT City Advantages

Benefit Category	PMS in GIFT City IFSC	PMS Onshore (India)
Minimum Investment	USD 75,000 (₹65 lakh)	₹50 lakh (SEBI rule)
Taxation	Tax neutral; no STT, CTT, DDT	STT, GST, and domestic capital gains apply
Currency	Multi-currency (USD/INR)	INR only
Regulator	IFSCA (single regulator)	SEBI + RBI + other bodies
Investor Base	Global: HNIs, NRIs, FPIs, family offices	Primarily Indian HNIs

Regulatory Framework for PMS in GIFT City

Governing Authority – IFSCA

The International Financial Services Centres Authority (IFSCA), set up in 2020, acts as the single unified regulator for all financial products and services in GIFT IFSC. Its mandate ensures ease of doing business, investor protection, and global competitiveness.

Key Regulations

• IFSCA (Fund Management) Regulations, 2025:
  • Governs PMS, AIFs, and mutual fund-equivalent structures in GIFT City.
  • Provides a unified and liberalized regulatory framework.
    
• Recent Amendments (2024):
  • Minimum investment in PMS reduced from USD 150,000 to USD 75,000 (~₹65 lakh), making PMS more accessible to NRIs and HNIs.
  • Flexibility in fund structures (multi-currency, global asset allocation).

Licensing Requirements for PMS Providers

To set up PMS in GIFT City, applicants must:

1. Apply for a PMS license with IFSCA.
2. Ensure the entity is incorporated in GIFT City (company/LLP).
3. Maintain required infrastructure, custodian arrangements, and compliance staff.
4. Meet prescribed net worth criteria.

Compliance Norms for PMS in GIFT City

• Net Worth Requirements:
  • Minimum USD 750,000 (~₹6.5 crore) net worth requirement for PMS providers (aligned with IFSCA norms).
    
• Fit & Proper Criteria:
  • Promoters and directors must be financially sound, with no regulatory blacklisting or adverse track record.
    
• Reporting Obligations:
  • Quarterly disclosures to IFSCA.
  • Investor reporting on performance, fees, and risks.
  • Annual audits and compliance certifications.

Investor confidence is boosted by the fact that PMS in GIFT City is regulated under international standards while retaining the ease of doing business that Indian HNIs and NRIs seek.

Minimum Investment & Eligibility for PMS in GIFT City

Latest Update on Minimum Investment

In 2024, IFSCA revised the entry threshold for Portfolio Management Services (PMS) in GIFT City, reducing the minimum investment from USD 150,000 to USD 75,000 (~₹65 lakh). This significant change has made PMS in GIFT City more accessible to a wider base of High-Net-Worth Individuals (HNIs), NRIs, and global investors. By contrast, SEBI-regulated onshore PMS in India continues to require a minimum of ₹50 lakh (~USD 60,000).

Who Can Invest in PMS in GIFT City?

The eligibility framework is designed to attract both Indian and global investors:

• High-Net-Worth Individuals (HNIs): Seeking bespoke, tax-efficient portfolio strategies.
• Non-Resident Indians (NRIs): Benefit from USD-denominated portfolios and tax neutrality.
• Foreign Portfolio Investors (FPIs): Gain direct access to Indian and global securities.
• Family Offices: Can consolidate global investments under a regulated IFSC PMS structure.

Comparative Chart – India Onshore PMS vs GIFT City PMS

Criteria	PMS in GIFT City IFSC	PMS Onshore (India)
Regulator	IFSCA (single unified regulator)	SEBI (Securities and Exchange Board of India)
Minimum Investment	USD 75,000 (~₹65 lakh)	₹50 lakh (~USD 60,000)
Currency Options	Multi-currency (USD, INR, other FCY)	INR only
Investor Base	HNIs, NRIs, FPIs, family offices	Primarily Indian HNIs
Taxation	Tax-neutral; exemptions on capital gains, GST, stamp duty	Domestic taxation applies (STT, GST, capital gains)
Compliance Framework	International standards, simplified filings	Multiple Indian regulators, higher compliance burden

While onshore PMS is limited to domestic HNIs, PMS in GIFT City offers global participation, better tax treatment, and multi-currency flexibility.

Tax Benefits of PMS in GIFT City

One of the strongest attractions for investors in PMS at GIFT City is its favorable tax environment.

1. Zero Capital Gains Tax

• Transfers of securities listed on IFSC exchanges (India INX, NSE IFSC) are exempt from capital gains tax.
• This makes PMS in GIFT City especially attractive for active traders and NRIs, compared to onshore PMS where capital gains are taxable.

2. GST Exemption on Management Fees

• Management and advisory fees charged by PMS providers in GIFT City are exempt from GST, lowering overall costs for investors.

3. No Stamp Duty on Transactions

• Securities transactions within IFSC are not subject to stamp duty, unlike onshore PMS where stamp duty applies.

Comparison of PMS Taxation – India vs GIFT City

Tax Component	PMS in GIFT City IFSC	PMS Onshore (India)
Capital Gains Tax	0% on IFSC-listed securities	10–15% (LTCG) / 15–30% (STCG)
Dividend Distribution Tax	Nil	Taxable in hands of investors
STT (Securities Tax)	Not applicable	Applicable
CTT (Commodities Tax)	Not applicable	Applicable
Stamp Duty	Exempt	0.015%–0.05% on transactions
GST on Fees	Exempt	18% GST on management fees

Case Study – NRI Investing USD 1 Million in PMS

Let’s illustrate the tax advantage of PMS in GIFT City vs onshore PMS for an NRI investor with USD 1M (~₹8.2 crore):

Parameter	PMS in GIFT City (IFSC)	PMS Onshore (India)
Investment Size	USD 1,000,000	USD 1,000,000
Annual Returns (10%)	USD 100,000	USD 100,000
Capital Gains Tax	Nil (0%)	~15% = USD 15,000
STT/Stamp Duty	Nil	~USD 2,000–3,000
GST on Fees	Exempt	18% on fees (assume USD 10,000 fee → USD 1,800 GST)
Net Post-Tax Return	~USD 100,000	~USD 81,200–82,000

By investing through PMS in GIFT City, the NRI saves nearly USD 18,000 annually compared to onshore PMS, a difference of 18% in tax costs.

How to Set Up PMS in GIFT City

Setting up a Portfolio Management Service (PMS) in GIFT City IFSC is a structured process governed by the IFSCA (Fund Management) Regulations, 2025. PMS providers—domestic or international—must follow specific steps to become operational.

Step-by-Step Process of Setting up PMS in GIFT City

1. Incorporate Entity in GIFT City
   • Incorporate a Company or LLP within GIFT City.
   • Ensure the entity complies with Companies Act/LLP Act provisions and is registered with GIFT City authorities.
     
2. Apply for PMS License with IFSCA
   • Submit application to the International Financial Services Centres Authority (IFSCA).
   • Provide details of promoters, business plan, investment strategies, and compliance structures.
     
3. Meet Net Worth & Compliance Requirements
   • Maintain minimum net worth of USD 750,000 (~₹6.5 crore) as prescribed.
   • Ensure “fit and proper” criteria for directors and key persons.
     
4. Infrastructure Setup
   • Establish office space in GIFT City’s commercial zone.
   • Appoint a custodian (mandatory) to safeguard investor assets.
   • Tie up with banking partners for USD/INR accounts.
     
5. IFSCA Approval & Operationalization
   • Upon review, IFSCA grants the PMS license.
   • Entity may then start onboarding investors and offering PMS strategies.

Estimated Timeline

• Application filing & review: 1–2 months.
• IFSCA evaluation & clarifications: 1–2 months.
• Infrastructure readiness & approvals: 1–2 months.
• Total estimated time: 3–6 months.

Costs Involved in Setting up PMS in GIFT City

Cost Head	Approximate Range (USD)	Notes
IFSCA Licensing Fees	$5,000–$10,000	One-time + annual renewal
Net Worth Requirement	$750,000 (capital base)	Mandatory minimum capital
Office Rentals	$15–$25 per sq. ft./month	Prime GIFT City business district
Compliance & Advisory	$20,000–$40,000 annually	Legal, audit, and regulatory costs
Operational Expenses	Variable	Salaries, technology, marketing

While initial costs are significant, PMS in GIFT City provides global access, tax neutrality, and regulatory efficiency—making it a lucrative long-term proposition for asset managers.

How Investors Can Invest in PMS in GIFT City

Once PMS providers are operational, investors—HNIs, NRIs, FPIs, and family offices—can seamlessly invest through structured routes.

Modes of Investment

• Direct Account Opening with PMS Provider
  • Investors onboard directly with licensed PMS providers in GIFT City.
  • Each investor is given a separate demat and bank account for transparency.
    
• Via NRE/NRO Accounts (for NRIs)
  • NRIs can invest through their NRE (Repatriable) or NRO (Non-Repatriable) accounts.
  • Funds can be freely remitted to and from GIFT City PMS structures.
    
• Through FPI (Foreign Portfolio Investor) Route
  • Institutional and foreign investors can use the FPI route to invest in PMS strategies.
  • Enables global family offices and funds to participate seamlessly.

Documentation Required

• Proof of identity and residence (passport, PAN, Aadhaar where applicable).
• Bank account details (NRE/NRO/foreign bank accounts).
• Investor declaration on risk appetite & investment objectives.
• Regulatory declarations (FATCA/CRS for foreign investors).

Currency Denominations Accepted

• USD (primary currency in GIFT City).
• INR (Indian Rupees).
• Other foreign currencies (EUR, GBP, etc.), subject to PMS provider’s policy and IFSCA approval.
  

Risks & Challenges of PMS in GIFT City

While Portfolio Management Services in GIFT City offer tax neutrality, global access, and simplified compliance, investors and providers must also understand the potential risks and challenges.

1. Regulatory Evolution

• PMS in GIFT IFSC is governed by the IFSCA (Fund Management) Regulations, 2025.
• As a relatively new regulatory framework, rules are still evolving, with periodic updates.
• Risk: Investors and PMS providers must adapt to regulatory changes that may alter compliance or reporting obligations.

2. Concentration Risk

• As of early 2025, GIFT City hosts 700+ financial entities, but PMS players remain fewer compared to onshore India.
• Limited diversity may result in concentration of strategies and reduced benchmarking opportunities for investors.

3. Market Risks – Currency & Global Exposure

• PMS in GIFT City allows multi-currency portfolios (USD,other FCY).
• Risk arises from currency volatility and exposure to global markets, which can impact returns.
• Example: An NRI investing in USD may face gains or losses purely due to exchange rate fluctuations.
  

4. Liquidity Constraints in Early Years

• IFSC-listed securities and new instruments may have lower trading volumes than traditional Indian exchanges.
• Early investors could face liquidity challenges while exiting positions.

Mitigation Strategies Adopted by PMS Providers

• Diversification: Expanding across equity, debt, and global asset classes to reduce risk.
• Currency Hedging: Using forward contracts and derivatives to manage FX volatility.
• Investor Education: Transparent reporting and disclosure of risks to clients.
• Strategic Partnerships: Collaborating with global custodians, fintechs, and IFSC exchanges to boost liquidity and investor confidence.
• Gradual Scaling: PMS providers are onboarding select high-quality clients first, ensuring performance stability before wider expansion.

Leading PMS Players in GIFT City (2025)

As the ecosystem expands, several PMS providers have already set up operations in GIFT City, supported by advisory firms and compliance specialists. Leading PMS players with portfolios domiciled in GIFT City include Marcellus Investment Managers, Abakkus Asset Manager, Helios India, and Aequitas, with other notable entities like ICICI Prudential also having a presence. Other prominent players such as ASK Investment Managers, Kotak Portfolio PMS, and Motilal Oswal are also active in the broader Indian PMS market and may have offerings for GIFT City clients.

PMS in GIFT City vs Mutual Funds & AIFs

Investors often compare Portfolio Management Services (PMS), Mutual Funds, and Alternative Investment Funds (AIFs) in GIFT City to determine the best fit for their financial goals. While all three structures are regulated under the IFSCA framework, they cater to different risk profiles and investor categories.

Comparative Snapshot

Criteria	PMS in GIFT City	AIFs in GIFT City	Mutual Funds in GIFT City
Minimum Investment	USD 75,000 (~₹65 lakh)	USD 150,000 (~₹1.2 crore) [varies by scheme]	As low as USD 1,000 (retail accessible)
Structure	Individually managed portfolios	Pool of funds with defined strategies	Collective retail-focused pooling
Customization	High – tailored to each investor	Medium – per scheme strategy	Low – standardized product for retail
Transparency	Direct ownership via demat accounts	Unit-based ownership	NAV-based ownership
Target Investors	HNIs, NRIs, family offices, FPIs	Ultra-HNIs, institutional investors	Retail, HNIs, global small-ticket investors
Taxation (IFSC)	No STT/CTT/DDT and capital gains exempt on IFSC exchanges for NRIs	No Tax for IFSC-listed securities for NRIs	No capital gains for NRIs
Liquidity	Moderate – depends on portfolio allocation	Low – lock-in of 3+ years typical	High – daily redemption (open-ended funds)
Regulator	IFSCA (Fund Management Regulations, 2025)	IFSCA (Fund Management Regulations, 2025)	IFSCA (Fund Management Regulations, 2025)

Which Structure Suits Which Investor?

• PMS in GIFT City → Best for HNIs, NRIs, and family offices seeking personalized, tax-efficient strategies and direct ownership of assets.
• AIFs in GIFT City → Suited for ultra-HNIs and institutional investors aiming to invest in private equity, venture capital, hedge funds, or special situation funds.
• Mutual Funds in GIFT City → Ideal for retail and small-ticket investors who want cost-effective diversification and liquidity.

Synergy Between PMS and AIFs in GIFT IFSC

• PMS and AIFs complement each other in India’s wealth management ecosystem.
• Many global and domestic managers first set up AIFs in GIFT City and later expand into PMS to serve HNIs and NRIs.
• Investors often use a dual approach: PMS for customized public market exposure, AIFs for private market opportunities.
• This synergy strengthens GIFT City’s positioning as a comprehensive hub for wealth management.

Future Outlook for PMS in GIFT City

IFSCA’s Roadmap for PMS Expansion

• IFSCA continues to liberalize regulations, evident from the 2024 decision to reduce the PMS entry threshold to USD 75,000.
• Upcoming reforms may include greater cross-border investment flexibility, digital-first compliance, and ESG mandates.

Government Push for GIFT City as a Global IFSC

• India is positioning GIFT City as a credible alternative to Singapore and Dubai for international financial services.
• Incentives such as 100% tax holiday for 10 years in a block of 15 years, no capital gains tax for NRIs, and exemptions from GST/stamp duty make PMS highly competitive globally.

Market Growth Potential

• Industry reports estimate PMS Assets Under Management (AUM) in GIFT City could reach USD 30–50 billion by 2030, driven by:
  • Increasing NRI inflows.
  • Growing family office participation.
  • Expansion of global asset managers into GIFT City.
    

Emerging Opportunities in PMS at GIFT IFSC

• ESG & Green Finance PMS: Alignment with global sustainability goals.
• Family Office Services: Tailored PMS for multi-generational wealth.
• Cross-Border Products: PMS offering seamless access to India + global equities under one platform.
• Digital Onboarding & Fintech Integration: Faster investor onboarding via AI-driven compliance checks.

Portfolio Management Services (PMS) in GIFT City have emerged as a powerful wealth management solution for HNIs, NRIs, family offices, and foreign investors, offering the perfect blend of tax neutrality, global access, and regulatory efficiency under the IFSCA framework. With benefits like no STT, CTT, or capital gains tax on IFSC-listed securities, reduced minimum investment of USD 75,000 (~₹65 lakh), multi-currency flexibility, and simplified compliance, PMS in GIFT City is fast becoming a preferred choice over traditional onshore PMS, mutual funds, and AIFs. As India positions GIFT City as a global financial hub rivaling Singapore and Dubai, the PMS ecosystem is projected to reach USD 30–50 billion AUM by 2030, driven by innovation, ESG-focused strategies, and rising NRI participation. For investors seeking personalized, transparent, and globally competitive portfolio management, GIFT City PMS represents the future of wealth creation.