The LRS norms for investment via GIFT IFSC have been eased by RBI

Current Context: The Reserve Bank of India (RBI) has recently relaxed the norms under the Liberalised Remittance Scheme (LRS) for investments through the Gift City International Financial Services Centre (IFSC).

• This move aims to boost foreign investments into India through the Gujarat-based financial hub.
• Resident Indians can now open a fixed deposit in dollars in a bank account at GIFT IFSC, allowing them to guard against inflation and depreciation against the US dollar.
• Additionally, residents can invest outside India through the foreign currency account (FCA) at GIFT IFSC, subject to the LRS limit of $250,000 per year.
• This aligns GIFT IFSC with other global financial centers and enhances accessibility for international investment opportunities.
• However, it’s not clear if LRS money can be used to invest in derivatives within the IFSC jurisdiction.

Question:

1 What is the annual limit for residents to invest outside India through the foreign currency account (FCA) at GIFT IFSC under the LRS?

• A) $100,000
• B) $250,000
• C) $500,000
• D) $1,000,000

Answer: B) Additionally, residents can invest outside India through the foreign currency account (FCA) at GIFT IFSC, subject to the LRS limit of $250,000 per year.