Artha Bharat's ADGM move puts spotlight on GIFT City's tax-rule mismatch

What happened

Artha Bharat Investment Managers, an $800-million asset manager, is moving the master funds of two of its six GIFT City funds to Abu Dhabi Global Market. Founder Sachin Sawrikar says the Income-tax Act does not adequately recognise the ultimate non-resident investor when capital is routed through an intermediate GIFT-based fund.

Confirmed

Global impact / market context

The move shows that tax rules can shape where fund managers base cross-border investment structures. If GIFT City cannot support layered funds whose end investors are overseas residents, managers may place master funds elsewhere, reducing the hub's role in pooling and directing foreign capital.

Analyst inference

Artha Bharat had targeted doubling assets to $1.5 billion over three years, growing from one fund to six, so the shift affects a firm with expansion plans. The clarification that a Section 80LA deduction rejection came from a portal glitch separates a technical issue from the structural tax concern.

Analyst inference

What to watch

1. Artha Bharat is shifting two master funds to Abu Dhabi Global Market, while its founder links the decision to how the Income-tax Act treats non-resident investors in layered GIFT structures. Confirmed
2. Watch whether other GIFT City managers with overseas investors and intermediate fund layers follow, since similar tax treatment could push more master funds to competing jurisdictions. Analyst inference
3. A clear rule recognising the ultimate non-resident investor in layered fund structures would be a possible policy fix to keep such outbound-to-outbound fund structures in GIFT City. Proposed

Evidence

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