ADIA to set up a USD 4-5 bn fund in India’s Gift City: Abu Dhabi’s sovereign wealth fund Abu Dhabi Investment Authority (ADIA) is set to establish a USD 4-5 bn fund in Gujarat International Finance Tec-City (Gift City) in India, after receiving in-principle approval from the city’s financial regulatory authority, Reuters reports, citing two unnamed sources with direct knowledge of the matter. The sovereign wealth fund is set to become the first to invest in the city, the newswire wrote.

What we know: ADIA is looking to kick off investments with the new fund by mid-year, gradually channeling the allocated funds into India over an unspecified period of time, according to one of the sources. Funds at Gift City can invest in both Indian and foreign equities, as well as debt securities and other assets, the newswire said.

The UAE has been one of India’s prime investors, with talks on establishing ADIA’s presence in Gift City ongoing since India’s Prime Minister Narendra Modi visited the UAE in July 2023, according to a joint statement from both states. Trade between the two countries reached USD 85 bn during India’s FY 2022-203, which ended in March 2023, with the UAE emerging as India’s third largest trade partner.

REMEMBER- ADIA and its subsidiaries have been exempt from long-term capital gains taxes on Indian investments since 2020 through a special provision. This provision remains applicable until March 2025.

India’s GIFT City is angling to become a foreign investor haven: The economic zone offers 10-year tax holidays for companies setting up shop in the city’s financial center, with no taxes on transferring funds internationally. One of the city’s goals is to curb offshore equity trading, Bloomberg wrote earlier. The city secured over USD 30 bn worth of commitments and USD 2.93 bn in investments across 95 local and global funds as of December 2023, according to Reuters.

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