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Conversations with business leaders and changemakers on how they built their business and what keeps them going.
Pankaj (00:03)
Welcome back to Letters of Intent to your podcast for dealmakers and risk takers. I'm Pankaj Raval, founder and managing partner here at Carbon Law Group. Today I'm joined by my colleague and co-host Sahil Chaudry, a corporate attorney here at the firm. But so much more. Sahil is gearing up for a major two month trip to India where he'll be meeting with family offices.
founders and cross-border advisors in Mumbai and beyond. Sahil, welcome. Let's tell listeners a little bit about what you'll be doing over in India and why you're going.
Sahil (00:31)
That's right. Pankaj, you declared go east, young man, because there is much
Pankaj (00:34)
Hahaha
Sahil (00:35)
opportunity for Carbon Law Group. So there are a lot of exciting things happening in India. it's a very exciting economy. And one of those exciting developments is GIFT City. So I am going to India starting late October. That's gonna be next week. I'll be on the ground meeting face to face with family office leaders, fund accounting teams, legal partners, CPA partners, in Mumbai
and Gujarat and the primary goal here is to bridge the gap between US based capital and India's rapidly growing financial infrastructure and in the process eat a lot of amazing food.
Pankaj (01:08)
Absolutely. The food is critical. I'm a bit jealous about that. I will definitely be having FOMO as you go to these great restaurants in India. So Sahil, there's a lot to be said about foreign markets, the opportunities in foreign markets. For a while, India has been growing, extremely fast growing economy. The GDP has been growing pretty quickly compared to other more developed nations.
Let me ask you, what is the potential for India? Why are we looking at India? Why are we looking to expand in India at this time?
Sahil (01:37)
Well, India is one of the fastest growing economies in the world. There, it is also the world's largest democracy. There are some fundamental pillars that make India a terrific investment. And from our perspective,
there have historically been a lot of cross-border transactions between India and the US, but GIFT City is going to make that a lot easier. For one, you're able to transact in dollars, and if you're US-based capital, you're able to repatriate funds much easier than you ever were before.
Pankaj (02:07)
Interesting, interesting. OK, yeah. So I think we need to dig in a little bit more. I want to share the website for GIFT City just to give people a
Sahil (02:13)
Yeah, let's take a look.
Pankaj (02:14)
better understanding of what we're talking about here and where they can find out more information as well. Good thing is they probably didn't have to outsource this. They probably did this in India. So that's good because a lot of people. It's beautiful. It's well
Sahil (02:24)
Absolutely look at this. Yeah, it's Here we go.
Pankaj (02:26)
done.
India is known to have a few web designers.
Sahil (02:28)
So the idea is
the idea yeah, absolutely. I mean the idea is that GIFT City becomes something like Singapore or Dubai, in the sense that it's a tax advantaged territory that encourages investment, especially in the world of financial services, bankers, advisors, and it's meant to specifically attract foreign capital.
Pankaj (02:47)
So Sahil, India's been developing pretty quickly under under Modi, whether you like his politics or not. He's really initiated change. But, you know, I think the big question is for me is like, what exactly is GIFT City and why now?
Sahil (02:59)
Definitely. GIFT City stands for the Gujarat International Finance Tech City. It's India's first operational smart city and designated international financial services center. Functionally, it acts as a special economic zone with a distinct regulatory regime overseen by a single unified regulator, the IFSCA.
Pankaj (03:19)
And what was the vision behind creating a separate financial jurisdiction within India?
Sahil (03:23)
India designed GIFT City to compete directly with global offshore financial hubs like Dubai, Singapore, and London. So it allows transactions to occur in foreign currencies like US dollars under tax-friendly and streamlined regulatory rules, while still physically keeping the capital and operations onshore in India, and especially at a time like this where the rupee has seen depreciation, it protects against that downside risk for US investors.
Pankaj (03:48)
So why right now, what about now is the kind of inflection point, tipping point for family offices and investors to start paying attention?
Sahil (03:56)
The regulatory frameworks, particularly around the family investment fund regime, have fully matured over the last year or two.
For tech founders, family offices, and the Indian diaspora, GIFT City provides a modern, regulated framework to deploy capital without navigating the traditional web of Indian exchange control bureaucracy. And the Indian diaspora has been looking for a solution like this for a while. I mean, it's not uncommon for Indian families in the US to have investments in India. And this is a way to make those transactions easier.
Pankaj (04:28)
Right. So, this sounds ideal on paper, but as we know in cross-border law, local tax incentives in one country can easily trigger severe tax liabilities in another if not structured correctly. So Sahil, let's walk our listeners through the three core legal and strategic insights you're presenting to clients on this trip.
Sahil (04:44)
Well, okay, let's start with insight number one the Family Investment Fund or FIF.
What makes this structure so attractive right now is that there is a key feature here. Gift City provides a fully onshore dollar-denominated platform right inside India.
Non-residents enjoy significant local tax exemptions on specific income streams, such as interest you earn on IFSC debentures. Historically, family offices used offshore jurisdictions like Singapore or Mauritius to route capital into India, which introduced heavy corporate maintenance costs, substance requirements, and friction when claiming U.S. foreign tax credits. GIFT City eliminates all that, it eliminates the middleman country entirely.
Pankaj (05:25)
So, how does this impact cross border families who have beneficiaries or assets split between the US and India?
Sahil (05:31)
Well, that's where the Family Investment Fund or FIF really shines. For families with members in both jurisdictions, an FIF serves a single unified regulated vehicle. It allows the family to consolidate global holdings, streamline governance, and establish multi-generational succession planning under a single entity rather than managing fragmented trusts across different legal regimes.
Pankaj (05:53)
Interesting, interesting. Okay. So it sounds complicated, but we'll definitely have to delve into that a little bit more. What about the capital repatriation for non-resident Indians? I know this is a big issue for a lot of people. It's getting the capital out. That's historically been
Sahil (06:04)
Yeah, you're right.
Pankaj (06:05)
a big challenge.
Sahil (06:05)
Yeah, you're right. That has been a tough part about investing in India is how do you get the money out. Well, traditionally NRIs investing back in India face strict lock in periods, annual limits when repatriating funds out of standard Non-resident Ordinary, or NRO bank accounts.
Investing through a GIFT City structure gives NRIs a mechanism for seamless, unrestricted capital repatriation in foreign currency, bypassing those traditional NRO limitations. So that's the first big insight here is you're eliminating the traditional NRO limitations and initial caps on repatriation.
Pankaj (06:40)
Interesting. Interesting. Okay. So those tax incentives and repatriation benefits sound fantastic, but you know, here's where things often break down. Local Indian advisors often pitch this, domestic tax holiday. But what happens when a US citizen or tax resident holds an interest in these
GIFT City structures?
Sahil (06:55)
Well yes, that can be a legal trap. If a US citizen or green card holder invests through a GIFT City vehicle without US tax planning, the IRS will view that foreign entity as a passive foreign investment company or a controlled foreign corporation.
Pankaj (07:09)
And the PFIC regime carries punitive tax rates along with interest charges on phantom gains if you don't handle those elections up front, is that right?
Sahil (07:16)
Yeah,
that's exactly right. So you must file timely the qualified electing fund or mark-to-market elections with the IRS, which requires specific accounting statements from the GIFT City Fund. Additionally, if the entity qualifies as a CFC, intercompany transactions and transfer pricing must satisfy US subpart F and GILTI rules. Domestic Indian setup alone does not protect you from the IRS.
Pankaj (07:42)
So this brings us to insight number three, how Carbon Law Group can actually solve these dual jurisdictional problems using our plug-and-play lead council model.
Sahil (07:50)
Yeah, that's right. Rather than having clients manage separate US and Indian legal teams who don't talk to each other, Carbon Law Group acts as the US lead council. We draft the overarching intercompany master service agreements, family charters, SEC compliance documents, and US corporate governance frameworks.
Pankaj (08:08)
And then we collaborate with specialized execution partners on the ground in India.
Sahil (08:12)
Correct. So we partner directly with local tax advisory firms, execution specialists, and that helps us handle domestic registrations, filling out the registrar of company filings and fund accounting. This gives clients a single coordinated framework that captures local benefits without exposing them to US regulatory liabilities.
Pankaj (08:31)
So Sahil, it sounds like what we're doing is actually creating a seamless bridge.
Between the US legal architecture and Indian financial expansion. I mean, Sahil so for these family office managers, investors, advisors listening to this who would like to meet with you while in India, what's the best way to connect?
Sahil (08:45)
Well, the best way to get in touch with me is through email or you can call the firm to schedule an appointment. I'll be taking in person meetings in Mumbai. I'll be based in Juhu. So we'll take you to some of the best spots. There's a melting pot, there's Cecconi's. And if you want some Pav Bhaji, it's the best in the world. And for US based clients preparing for an upcoming capital deployment, I'm also available for virtual consultations and I'm gonna be staying up late so you can book a time that's good for you on US
Time. So yeah, reach out directly to me via email that's sahil@carbonlg.com, or you can reach out through our firm's website @carbonlg.com. And this is specifically, really exciting if you're a family office right now in the middle market. This is the first time you're gonna be able to transact in dollars with virtually no limits related to repatriation.
Pankaj (09:34)
Amazing. Amazing. Super exciting. I know there's a lot to learn. I actually, you know,
Sahil (09:36)
Are you a Pav Bhaji Pankaj? Are you a Pav Bhaji fan?
Pankaj (09:41)
my wife is more of a Pav Bhaji fan. I'm more of a like a bhel and street food, like golgappa, panipuri. Like I'm I'm I like I like those yeah, yeah. I mean I that's
Sahil (09:47)
Yeah. I love golgappas. Yeah. Yeah.
Pankaj (09:53)
that's what I love is the street food. I remember like Elco Market in Bandra is like a must-go.
Sahil (09:57)
yeah.
Pankaj (09:58)
Every time I'm in India,
Just the whole experience of eating panipori on the street in India is like is a is a nostalgic experience. So
Sahil (10:03)
my gosh. There are
I mean, I've been to some of the best restaurants at this point in Mumbai. I went to a great
Pankaj (10:10)
Yeah.
Sahil (10:10)
Italian place called Americano. Aisha and I love going to a place called Koishii. it's incredible. So I I am very
Pankaj (10:16)
Yeah.
Sahil (10:17)
excited. So come join me. Come have lunch with me.
Pankaj (10:19)
Yes, yes.
Sahil (10:20)
we'll do a food tour and we'll talk about GIFT City.
Pankaj (10:23)
That sounds awesome. That sounds exciting. I'll be there in spirit. And hopefully one of these days we can all do it together. There's also, great restaurant. Remember Trèsind too. Trèsind is a must, a must try when
Sahil (10:32)
Awesome.
Pankaj (10:32)
you guys are there. So definitely book that. And Sahil, yeah.
Sahil (10:34)
Wow, we need to
get some we need to get some ad money from all these companies we just shouted out. Yeah.
Pankaj (10:38)
Seriously, seriously, seriously. We need a whole food podcast, I think, for India.
but yeah, safe, safe travels, super exciting. I'm excited to hear, who you meet with and just learning more about the potential for what's happening in GIFT City and how that's gonna really open up things for our clients, investors, family offices, people looking to capture some of the upswing that India offers. Until next time, this is Carbon Law Group and our podcast is Letters of Intent.
The podcast for deal makers and risk takers. We wish you good deal making.