GIFT City vs Offshore Unit-Linked Insurance Plans: A Comparison for Non-Resident Indians

GIFT City Emerges as a Strong Alternative to Offshore Centres for NRIs

Non-Resident Indians (NRIs) seeking dollar-denominated policies and insurance-linked investment plans (Ulips) have traditionally turned to offshore centres such as Singapore, the UAE, the UK, or Hong Kong for access to global funds and a well-oiled ecosystem. However, with the emergence of the Gujarat International Finance Tec-City (GIFT City), they now have options at home as well.

GIFT City is not just catching up; it is beginning to match or even improve on traditional offshore offerings. Canara HSBC Life Insurance, HDFC International Life, ICICI Prudential Life Insurance, Star Union Dai-ichi Life Insurance, Tata AIA Life Insurance, and the Life Insurance Corporation of India are among the insurers operating in GIFT City.

Currency and Tax Treatment

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In terms of currency, there is now little difference between GIFT City policies and offshore plans. Both are available in US dollars, providing exposure to major global currencies.

However, the bigger shift is in tax treatment. Under the April 2025 amendment, GIFT City-issued policies can deliver fully tax-free maturity proceeds in India under Section 10(10D), as long as the premium remains within 10 percent of the sum assured. This is a significant advantage over offshore policies, which do not offer a uniform tax outcome and are subject to the policyholder's country of residence and local tax laws.

Comparison of Tax Treatment

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Investment Access and Digital Experience

GIFT City products now provide exposure to global investment funds, along with multi-asset and multi-geography allocation through savings plans. The digital experience is also a significant advantage, with policies available for purchase through end-to-end online onboarding, remote KYC, and digital servicing. NRIs can invest directly through their NRE or overseas bank accounts using a fully digital platform.

Liquidity and Flexibility

In terms of liquidity and flexibility, both GIFT City and offshore options are broadly comparable. GIFT City plans offer partial withdrawals, while offshore structures have historically provided flexible wealth planning features.

Repatriation of Funds

A more structural difference appears in the repatriation of funds. GIFT City is treated as an offshore territory under the Foreign Exchange Management Act (FEMA), which means funds can be repatriated freely without the compliance friction often associated with India-linked products.

Legacy Building

The contrast is sharper when looking at the ecosystem and the trust factor. Offshore insurance hubs benefit from decades of global usage and legal recognition. GIFT City, on the other hand, is a newer financial centre that is still building its international track record, even though its regulatory framework is designed to mirror offshore conditions.

GIFT City vs. Traditional INR-Based Buying

GIFT City offers a simpler, more flexible route for NRIs than offshore or traditional INR-based insurance purchases. Buying via GIFT City removes common friction points such as mandatory currency conversion, complex documentation, and lengthy repatriation processes.

What Policyholders Must Understand

GIFT City is emerging as a strong fit for NRIs seeking global investment exposure, currency diversification, tax efficiency, and a fully digital experience, all within a structure linked to India. Offshore plans continue to appeal to those who prioritise long-established global acceptance and portability across jurisdictions. The shift, then, is not about one replacing the other; it is about the balance changing, with GIFT City becoming a credible first choice for a segment of NRI investors.