Finance Ministry frees GIFT City pension funds from PFRDA restriction on global investments

The Ministry of Finance has removed the restriction under Section 25 of the PFRDA Act 2013 on pension funds operating in an International Financial Services Centre (IFSC) like GIFT City. They will now be allowed to invest subscribers' funds outside India.

The move is expected to streamline compliance requirements for financial institutions offering pension and retirement-linked products at IFSCs such as GIFT City in Gandhinagar, Gujarat.

As per Section 25 of the Pension Fund Regulatory and Development Authority Act, 2013, pension funds are not allowed to invest the funds of subscribers outside India, either directly or indirectly.

"No pension fund shall, directly or indirectly, invest outside India, the funds of subscribers," says Section 25 of the PFRDA Act 2013.

However, the Finance Ministry has provided an exception in case of IFSCs through a Gazette notification dated October 1, 2025. It said that Section 25 will not apply to financial products, financial services or financial institutions in an IFSC.

"In exercise of powers conferred by sub-section (1) of section 31 read with section 30 of the International Financial Services Centres Authority Act, 2019 (50 of 2019), the Central Government hereby directs that section 25 of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013) shall not apply to financial products, financial services or financial institutions, as the case may be, in an International Financial Services Centre," the notification said.

The notification comes three months after Finance Minister Nirmala Sitharaman visited the GIFT City and urged the regulators and stakeholders to step up efforts for attracting more foreign capital into the country through "structured and well-regulated" mechanisms.

The Finance Minister exhorted officials to work towards making GIFT IFSC more competitive and cost-effective to attract HNI investments in the country. She also underlined the potential of IFSCA’s role in mobilising Sovereign and Pension Funds at IFSC for the financial needs of the country.

IFSCA (International Financial Services Centers Authority) is a unified authority for financial products, financial services and financial institutions in IFSCs.