How to Buy Dollar Bonds in India: GIFT City IFSC Guide for Investors

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Achieving dollar-denominated exposure has traditionally been quite tedious. You would have to set up a foreign brokerage account, complete W-8BEN forms, track cost basis in a currency you rarely work in, and hope your Chartered Accountant (CA) understands Schedule FA reporting well.

GIFT City has simplified this. It is India’s International Financial Services Centre, located in Gandhinagar, Gujarat, and is legally treated as an offshore territory under the Foreign Exchange Management Act (FEMA). Transactions in GIFT City are in foreign currencies and are regulated by the IFSCA. You continue to use an Indian broker, have an Indian KYC, and rely on Indian dispute resolution if needed.

For resident Indians who want Dollar bonds without fully stepping outside the Indian regulatory ecosystem, this has become one of the more practical entry points. Here’s how the framework actually works, who can use it, what’s on offer, and what it’ll cost you, including taxes.

What Is GIFT City IFSC, and Why Does It Matter for Bond Investors

GIFT City hosts two exchanges we will focus on: India INX, launched in January 2017, and NSE IX, launched in June 2017. Both exchanges provide a platform for the debt securities market where issuers, both Indian and foreign, can list foreign-currency bonds, including Dollar bonds, green bonds, masala bonds, medium-term notes, and other bonds.

This is not a minor, experimental part of the market. Indian issuers have already used these platforms to raise and list substantial foreign-currency debt. SBI, for example, became the first issuer to raise and list bonds on NSE IX following India’s sovereign rating upgrade, issuing a $500 million Reg S bond ^[1] with a 4.50% coupon.

Axis Bank subsequently listed $600 million ^[2] of Sustainable Additional Tier 1 notes on India INX and NSE IFSC, while Indian Oil listed $1.4 billion ^[3] of US-dollar bonds and SGD 400 million of Singapore-dollar bonds on the same exchanges. These are a few years old now, but they illustrate the scale and type of issuance the platform regularly handles. Worth checking IFSCA’s or the exchanges’ current listing data for the latest volumes before you invest.

What Dollar Bonds Can You Actually Buy Through GIFT City

The menu has expanded well beyond just Indian corporate paper. Currently, IFSC-registered brokers allow resident Indians to trade:

• Indian corporate Dollar bonds: Issuers like SBI, Axis Bank, and Indian Oil have raised and listed dollar debt here
• Sovereign and quasi-sovereign bonds issued by foreign governments and multilateral agencies, like the World Bank and the Asian Development Bank
• Green and ESG bonds that fund renewable energy or sustainable infrastructure projects
• Masala bonds and MTNs (Medium-Term Notes) issued by Indian companies in foreign currencies
• Global corporate bonds from non-Indian issuers, depending on what your broker’s IFSC platform offers access to

Minimum ticket sizes and liquidity vary a lot by instrument. Some corporate bonds are traded in large lot sizes meant for institutions, while broker platforms increasingly package smaller-ticket access for retail investors. Always confirm the specific minimum with your broker before assuming you can get in.

How to Actually Invest: The LRS Route

Here’s the part that trips people up. As a resident Indian, you don’t get to just wire money into GIFT City freely; you go through the RBI’s Liberalized Remittance Scheme (LRS).

Detail	What it means for you
Annual limit	USD 250,000 per financial year (April–March), per individual
Who can use it?	All resident individuals, including minors (with a guardian’s countersignature)
Who can’t	Companies, HUFs, partnership firms, trusts, NRIs
TCS threshold	Remittances up to ₹10 lakh a year are TCS-free.
TCS above threshold	20% TCS on the excess (refundable/adjustable via your ITR)
Purpose code	S0001, for securities investment
Where funds sit	A Foreign Currency Account (FCA) opened with your IFSC broker or bank

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A few important details:

• Your purchase of a GIFT City bond will count towards the $250,000 limit of the LRS scheme along with your other remittances in a given year, such as travel, tuition, gifts, and other offshore investments. 
• You will need a separate demat and trading account in GIFT City for transactions there; your regular Indian account will not work. The KYC process is digital and will require your PAN, Aadhaar, OTP, bank account details, and sometimes your passport. 
• Once funds are available, you can access bonds and structured notes on your broker’s IFSC platform, alongside options like US stocks via UDR on NSE IX or GIFT City mutual funds. 
• Idle foreign exchange doesn’t get to sit idly. Under RBI’s LRS framework, realized or unused foreign exchange that isn’t reinvested generally has to be repatriated and surrendered to an authorized person within 180 days.

Tax Treatment: What You’ll Actually Owe

This is where GIFT City doesn’t offer a free pass. Interest income and capital gains from Dollar bonds bought this way are taxable in India at applicable rates, same as any other foreign investment income for a resident. Practically:

• Interest income gets added to your total income and taxed at your slab rate.
• The capital gains tax treatment depends on the holding period and the type of instrument. For debt instruments, the rules are quite complex and are constantly changing, and thus it is advisable to refer to a tax professional. 
• You must report the holding on Schedule FA of your income tax return and, if foreign tax is withheld, file Form 67 to claim a foreign tax credit. 

One genuine advantage of the GIFT City route versus a direct foreign brokerage account: you skip some of the recurring US paperwork (like re-filing W-8BEN every three years) since the broker relationship and documentation stay Indian, even though the underlying holding is dollar-denominated. Compliance is simpler, even if the tax liability itself doesn’t change.

GIFT City vs. Direct Foreign Brokerage: Quick Comparison

Factor	GIFT City IFSC route	Direct foreign brokerage (via LRS)
Account/KYC	Indian broker, PAN + Aadhaar KYC	Foreign broker, W-8BEN, foreign KYC
Regulator	IFSCA	SEC/FINRA or relevant foreign regulator
Dispute resolution	Indian arbitration	Foreign jurisdiction
LRS applicability	Yes, it counts toward the $250,000 cap.	Yes, it counts toward the $250,000 cap.
Paperwork burden	Lower (Indian compliance)	Higher (FATCA, Schedule FA, cost-basis tracking in INR)
Product access	Growing, but narrower than global brokers	Broader universe of global bonds

Is This Route Right for You?

GIFT City provides a good compromise if you want exposure to dollar-denominated fixed income without having to manage a foreign broker relationship. You can get Indian regulatory reassurance, dollar returns, and growing (if still evolving) product offerings there. If you are after a global bond that is not listed on India INX or NSE IX, you will still need to use a foreign broker. Any way you go, your LRS ceiling and Indian tax liability will still apply. 

Dollar Bonds Frequently Asked Questions

Sources

1. SBI — $500 million Reg S bond and NSE IX listing
2. Axis Bank — $600 million Sustainable AT1 listing
3. NSE — IndianOil foreign-currency bond listing

Disclaimer

Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.