GIFT City/IFSC fund vs. direct FPI registration vs. offshore fund: what NRIs are actually choosing between

Seeing a lot of posts here and elsewhere asking some version of "how do I actually get money into Indian equities from abroad," and the honest answer is there isn't one route. There are three, and they suit pretty different situations. Laying it out because most explainers I've seen only cover one.

1. GIFT City / IFSC-domiciled fund (newest, NRI-friendliest) USD-denominated, so no FX conversion friction on entry/exit. Onboarding runs through a single IFSCA-regulated banking unit rather than coordinating a separate bank + custodian + broker. If the specific scheme qualifies as a "specified fund" under IFSCA rules, income is exempt from Indian tax under section 10(4D). That qualification isn't automatic just because a fund is domiciled in GIFT City though, so it's worth confirming directly rather than assuming. Minimums are typically retail-accessible (some schemes start around $500). The Wealth Company launched a new dollar-denominated fund-of-funds through this route this week, giving pooled exposure across Indian mutual funds/ETFs rather than picking individual schemes (Business Today, Business Standard, 11 Aug 2026), one of several entrants in what's becoming a real product category, not a one-off.

2. Direct FPI registration The institutional/HNI route. More paperwork upfront (custodian, Designated Depository Participant (DDP), KYC through India's FPI regime), but no ticket-size ceiling and access to the full listed universe rather than whatever a pooled scheme holds. This is the route funds and larger individual investors use; overkill for someone wanting to park a few thousand dollars in an index-tracking product.

3. Offshore fund with an Indian-equity mandate A fund domiciled outside India (Cayman, Luxembourg, etc.) that itself holds Indian equities, either directly as an FPI or through a feeder structure. You're investing in the offshore vehicle, not directly in India, so the tax and reporting sits at the fund level rather than requiring you to deal with Indian compliance yourself. Trade-off is you're relying on the manager's structure and disclosure rather than holding registration yourself.

None of these is strictly "better." GIFT City suits someone who wants pooled, tax-clean, dollar-denominated exposure without much paperwork; direct FPI suits someone who wants full control and has the ticket size to justify the overhead; offshore funds suit someone who'd rather delegate the India-specific complexity entirely. Happy to go deeper on any of the three if useful.