Indians now have broader access to foreign currency accounts at Gujarat International Finance Tec-City (GIFT City), enhancing business opportunities for the finance hub promoted by Prime Minister Narendra Modi.

Launched in 2011 by Modi in the western state of Gujarat, GIFT City is intended as an alternative to regional financial hubs like Dubai. Although it offers more lenient regulations compared to the rest of India, it has experienced a slow uptake in interest from foreign investors, Reuters reports.

In a circular issued on Wednesday, the Reserve Bank of India announced new changes permitting Indian investors to utilise GIFT City for increased overseas spending and investments. 

Indians can now remit up to $250,000 annually for education, medical expenses, and specific types of investments.

Previously, foreign currency accounts at GIFT City could only be used to invest in overseas-listed securities and pay tuition fees for foreign universities.

The relaxation of these norms is expected to boost banking and financial services in the hub, including payments and insurance.

According to Jaiman Patel, partner at EY India, banks will be the primary beneficiaries of this move, which will also “open up the window” for life insurance companies. 

Suresh Swamy, partner at PwC in Mumbai, added that this change will give India better visibility on how remitted funds are being used, as authorities will be able to request data more easily.

“Financial services activity which was getting routed through other jurisdictions such as Singapore or Dubai can now be done through International Financial Services Centre,” he stated.

Former Central Bank deputy governor R. Gandhi stated that the overarching rules for remittances out of India will still apply.

Over the past year, Indian authorities have made several decisions to boost activity at GIFT City, such as allowing the listing of Indian companies and permitting the wealthy to open family investment funds.