Artha Bharat Investment Managers IFSC, a fund management entity (FME) in GIFT City managing over $800 million in assets in the financial centre, is relocating two of its funds to Abu Dhabi Global Market (ADGM), citing tax uncertainty and compliance burden.
The FME is relocating the master fund of the $112 million Artha Global Multiplier Fund, which invests primarily in the US consumer theme. The second is the recently launched Artha Bharat Absolute Return Fund, an arbitrage fund investing in Indian securities. The Artha Global Multiplier Fund is open only to non-resident Indians (NRIs).
The FME is in the process of setting up a new fund in ADGM, following which investors in the current funds may shift to the new one.
Sachin Sawrikar, the firm's founder and chief executive officer (CEO), said, "We do not believe that taxation is smooth here (GIFT City). There is a lot of uncertainty. Our FME was disallowed the tax deduction under Section 80LA, a matter we are pursuing. Leading fund jurisdictions generally tax at the investor level. In India, there are several categories, with differentiated taxation."
Section 80LA of the Income Tax Act, 1961, provides tax deductions for specified income earned by offshore banking units (OBUs) in special economic zones (SEZs) and units in international financial services centres (IFSCs).
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Sawrikar clarified that the move was not an exit from GIFT City. The FME's other funds will continue to be managed from GIFT City, providing risk management and technology support for others.
He also flagged withholding tax on payments to overseas service providers such as law firms and research vendors, even though the money comes from foreign investors and is invested abroad.
Along with the concerns around taxation, the fund house noted that the minimum ticket size for these funds was $150,000, a steep amount considering the Liberalised Remittance Scheme (LRS) limit of $250,000 per financial year for Indian investors.
In comparison, a minimum ticket size of $55,000 in ADGM will allow the fund to widen its investor base, the FME noted.
Sawrikar added that one of the FME's funds had faced distribution constraints. Non-resident investors are required to share their PAN details, while the fund cannot accept money from resident Indians because, if resident and non-resident investors are mixed, the fund loses its specified fund status and is taxed at the fund level. As a result, the fund has not been able to attract any investors in the last 15 months.
The firm expects its ADGM licence shortly and applied for one in Singapore in June. A venture capital fund planned earlier for GIFT City will be domiciled in Mauritius instead, Sawrikar added.
“The difficulty lies less in the benefits than in the conditions attached to them. A fund managed from GIFT City has to keep meeting prescribed tests on its investor base, concentration of holdings, resident participation and corpus to stay within the safe harbour, and a new unit cannot be carved out of an existing Indian business,” said Raheel Patel, partner, Gandhi Law Associates.
Patel added that these tests had to be monitored on a continuing basis, and a breach could carry real tax consequences.
“Abu Dhabi offers a comparatively simpler framework, and for a fund house weighing incentive against certainty, that simplicity can tip the balance,” Patel added.
As of June 2026, there were around 235 FMEs registered in GIFT City, with over 400 schemes. Cumulative commitments from non-retail fund management stood at around $45 billion.