Overview: Artha Bharat Investment Managers plans to shift two fund structures from GIFT City to Abu Dhabi Global Market (ADGM), citing tax uncertainty, compliance concerns and fundraising constraints. The proposed move highlights practical considerations in choosing a financial centre. However, the company does not intend to leave GIFT City entirely and plans to retain other funds and continue supporting overseas entities.
GIFT City was established to attract international financial services to India through a dedicated regulatory framework and tax incentives. Its fund-management ecosystem has grown, but the benefits must be assessed alongside investor eligibility, tax treatment and continuing compliance obligations.
The reported relocation of two Artha Bharat fund structures brings these issues into focus. The development illustrates why a financial centre’s tax incentives alone may not determine whether its framework suits a fund manager’s investment strategy and investor base.
Why Is Artha Bharat Moving Two Funds?
According to a Business Standard report, Artha Bharat Investment Managers, which manages more than US$800 million in assets at GIFT City, plans to relocate two fund structures to ADGM in Abu Dhabi. The company is setting up a new fund there, after which investors in the existing funds may shift to it.
The proposed move concerns the follwoing two Funds:
- Artha Global Multiplier Fund: The master fund of a US$112 million strategy focused on US consumer businesses. The fund is reported to accept only non-resident Indians (NRIs).
- Artha Bharat Absolute Return Fund: A recently launched arbitrage fund investing in Indian securities.
The move is reportedly attributed to uncertainty over tax deductions, withholding tax on payments to overseas law firms and research vendors, and restrictions affecting fundraising.
The company has clarified that this is not a complete exit from GIFT City. Other funds will remain there, and the firm intends to continue providing risk-management and technology support to overseas entities. It has also applied for a fund-management licence in Singapore and plans to domicile a proposed venture capital fund in Mauritius.
Tax Incentives and Compliance Requirements
Under Section 80LA of the Income-tax Act, 1961, eligible IFSC units could claim deductions on specified qualifying income, subject to statutory conditions. From 1st April, 2026, Section 147 of the Income-tax Act, 2025, provides the corresponding framework.
Following amendments under the Finance Act, 2026, eligible IFSC units can claim a 100% deduction on specified income for 20 consecutive tax years within a 25-year period, subject to the applicable conditions. The revised framework does not mean every entity operating in GIFT City automatically qualifies. Eligibility, qualifying income and prescribed documentation remain relevant. Nor does the change automatically settle disputes concerning earlier tax years.
Artha Bharat has reportedly challenged the denial of an earlier deduction. It has also raised concerns about withholding tax on payments to overseas service providers. The tax treatment of cross-border payments depends on the nature of the service, the recipient and the applicable legal provisions.
For fund managers, the issue is therefore not simply the availability of incentives. They must assess the conditions attached to those benefits, the treatment of operating expenses and the ongoing work required to maintain compliance.
Investor Eligibility and Fundraising Constraints
The relevant GIFT City fund structure reportedly had a minimum investment threshold of US$ 150,000 in comparison to US$ 55,000 proposed for the ADGM structure. These figures relate to the arrangements reported for these funds and should not be treated as universal minimums across either jurisdiction.
The difference matters because the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) permits resident individuals to remit up to US$250,000 per financial year for permitted transactions, subject to applicable conditions and restrictions. The limit does not automatically permit every overseas fund investment.
Artha Bharat has also cited restrictions involving investor eligibility and Permanent Account Number (PAN) requirements for non-resident investors. According to the report, the firm’s specified fund had attracted no investors in 15 months amid these constraints.
These concerns are specific to the fund’s circumstances. Investor eligibility, tax status and the consequences of accepting different investor categories depend on the applicable rules and the structure involved.
ADGM and the Wider Implications for GIFT City
ADGM offers a separate regulatory framework for financial services and investment funds. However, a proposed relocation involves more than establishing a presence in another jurisdiction. Fund managers must consider regulatory permissions, investor eligibility, fund documentation, service-provider arrangements and ongoing reporting obligations.
The reported US$55,000 investment threshold does not, by itself, establish that the proposed ADGM fund is open to retail investors. Its classification and applicable regulatory restrictions determine who can invest. The proposed transfers should also not be treated as completed merely because the firm is setting up a new vehicle in ADGM.
Meanwhile, GIFT City’s IFSC ecosystem continues to operate. According to the International Financial Services Centres Authority (IFSCA), as of June 2026, the ecosystem had 235 Fund Management Entities managing 401 funds or schemes, with cumulative commitments of US$45.08 billion.
These figures establish the scale of the ecosystem, but do not prove that every fund is commercially successful or that GIFT City is more or less attractive than competing centres.
The proposed relocation is best understood as a fund-specific decision. Tax certainty, investor access, cross-border payment obligations and operating costs can all influence jurisdictional choices, but the outcome depends on each fund’s objectives and circumstances.
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FAQs
The company has cited tax uncertainty, withholding tax concerns and fundraising constraints. The proposed relocation concerns two fund structures, not a complete exit from GIFT City.
Section 147 of the Income-tax Act, 2025, provides a 100% deduction on specified qualifying income for eligible IFSC units for 20 consecutive tax years within a 25-year period, subject to statutory conditions.
No. The US$250,000 annual limit applies to permitted remittances by resident individuals, subject to the applicable conditions and restrictions.
The report describes a planned relocation involving a new fund in ADGM. The completion of the transfers should not be assumed without confirmation.
Artha Bharat’s proposed fund relocation highlights how tax uncertainty, investor restrictions and compliance costs can influence financial-centre choices. It does not establish a wider departure from GIFT City. Fund managers must assess tax incentives alongside investor eligibility, regulatory obligations and commercial viability before selecting a jurisdiction.
