On 9 November 2026, the International Financial Services Centres Authority (IFSCA), which regulates GIFT City, issued a consultation paper that would let registered research entities there offer a model portfolio to investors. The paper describes a model portfolio as a basket of securities for which a research report recommends a weight for each holding. The proposal is open for public comment until 30 November 2026, according to the IFSCA consultation paper and a Business Standard report published the same day.
For advisors, the useful point is what a model portfolio is not. It is not a fund and it is not a managed account. The client buys and holds every security in the basket in their own name, so every rule that applies when a client invests abroad directly also applies here, from the remittance limit to TCS. Advisors who use the guide to GIFT City mutual funds and other global routes to compare options for clients should treat a GIFT City model portfolio as research attached to direct investing, rather than as a new kind of product.
What IFSCA proposed on 9 November
The paper sits under the IFSCA (Capital Market Intermediaries) Regulations, 2025, which already allow research entities in GIFT City to publish research reports. It proposes to make clear that a research recommendation can include a model portfolio, which is not permitted in GIFT City today. Business Standard reported that the proposal follows representations from the industry. Any entity that wants to offer a model portfolio, including a broker dealer, would first have to register with IFSCA as a research entity.
The proposed conditions are detailed. Each portfolio would need a specific weight for every holding, a defined geographic universe and defined asset classes, and a stated selection method, rationale and investment horizon. It could be issued only through a formal research report with a factsheet, and its name would have to describe its type and objective. Rebalancing would generally happen at intervals set in advance, and any change outside that schedule would come with a stated reason. Any comparison with an index would have to use a benchmark defined in advance and applied consistently.
The paper also draws a line around what does not count. A plain list of recommended securities, with no weights attached, would not be a model portfolio. IFSCA expects these baskets to be largely global and often multi-asset, and Business Standard reported that they could include equities, fixed-income ETFs and commodity ETFs. Because the paper is only a proposal, none of this applies yet, and the final circular may differ from what was proposed.
How a model portfolio differs from a fund or a PMS
In a mutual fund, the client owns units and the fund owns the securities. In a discretionary portfolio management service, the client owns the securities but a manager decides when to buy and sell them. In a model portfolio, the research entity recommends and the client decides, places the orders and holds the securities directly. The responsibility for acting on each rebalancing note therefore sits with the client, or with the advisor who helps the client carry it out.
The idea is not new to Indian advisors. SEBI's guidelines for research analysts, issued on 8 January 2025, brought model portfolios within research services in the domestic market and require each model portfolio to have its own research report with disclosures, rationale and methodology, according to a Khaitan and Co summary of the guidelines. The IFSCA proposal follows a similar logic. The difference is that GIFT City baskets are expected to hold mostly global securities, which brings the client's foreign remittance rules into play.
Why model portfolio investing still runs through the LRS
A resident client who wants to follow a GIFT City model portfolio first has to move money there. The RBI's circular of 10 July 2024 lists the purposes for which resident individuals can remit to IFSCs under the Liberalised Remittance Scheme, including investment in securities and the use of financial products and services under the IFSCA Act, 2019, according to the RBI notification. The same circular allows residents to open a foreign currency account in an IFSC for these purposes. The RBI's LRS FAQs set the overall limit at USD 250,000 per person per financial year, and our note on how GIFT City investment works for resident Indian clients covers the account steps.
Because the money moves under the LRS, TCS applies as it would to any other investment remittance. Under Section 394 of the Income-tax Act, 2025, the authorised dealer collects TCS of 20 per cent on LRS remittances above ₹10 lakh in a tax year for purposes other than education or medical treatment. For example, a client who remits ₹40 lakh to GIFT City in tax year 2026-27 to follow a model portfolio would have TCS of ₹6 lakh collected, which is 20 per cent of the ₹30 lakh above the threshold. The client can claim that amount as a credit in the income tax return, and the guide to TCS on foreign remittance explains how.
Rebalancing adds a further layer. Each change to the model means sales and purchases in the client's own account, and each sale can create a gain or a loss that the client has to report. A client who follows a model should therefore expect more record keeping than a single fund holding would create. Advisors should agree with the client's CA, before the first trade, who will track each transaction and each rebalancing note.
The risks a client takes on
A model portfolio does not change the risks of the securities inside it. The client can lose capital if markets fall, and the value in rupees moves with the exchange rate as well as with the holdings. A narrow theme or a single region concentrates risk in one place. Rebalancing late or only in part leaves the client's holdings different from the model, and every trade carries costs that a published model may not show. Research is an opinion, and a well documented report does not make an investment safe or suitable for every client.
What advisors should check before a client follows one
The checks follow the order in which a client would act. Under the proposal, only an entity registered with IFSCA as a research entity could offer a model portfolio, so registration comes first. The factsheet comes next, and advisors should read it with the same care they give a scheme information document.
- Confirm that the entity offering the basket is registered with IFSCA as a research entity, and keep a record of the registration.
- Read the research report and factsheet for the universe, asset classes, selection method, horizon, rebalancing schedule and risks.
- Plan the remittance under the LRS, including the purpose, the client's remaining annual limit and the TCS the bank will collect.
- Agree with the client's CA who will record each trade, each rebalancing note and each gain or loss for the return.
- Compare the basket with the client's existing global holdings, so the client does not double up on the same markets.
That last step matters because many clients already hold international funds, GIFT City funds, US stocks or private US real estate. Advisors who introduce eligible clients through Raveum's partner page will recognise the same overlap question from private US commercial real estate, where each deal is reviewed before it is offered and held in its own legal entity, and the guide to US commercial real estate investment explains how that kind of holding sits next to listed securities. Advisors who see a problem in the proposal, such as how rebalancing notes would reach clients, can send comments to IFSCA by email, in Word or Excel format, before 30 November 2026.
The 9 November paper is short, but it settles a question advisors will hear more often as GIFT City widens what it offers. A model portfolio gives a client researched weights and a schedule for changing them, while the money, the trades, the tax and the risk stay with the client. Advisors who keep that division clear can tell a client exactly what the research covers and what it leaves to them, which is the comparison the GIFT City guide is built to support.
Frequently asked questions
What is a model portfolio?
A model portfolio is a basket of securities with a recommended weight for each holding, published through a research report. The client follows it by buying the securities in their own account and adjusting them when the model is rebalanced. Under IFSCA's November 2026 proposal, a plain list of recommended securities without weights would not count as one.
Is a model portfolio the same as a PMS?
No. In a discretionary portfolio management service, a manager decides when to buy and sell on the client's behalf. In a model portfolio, a research entity recommends the basket and each rebalancing, and the client places the orders. The client holds the securities directly and chooses whether to act on each change the research entity publishes.
Can research analysts in India offer model portfolios?
Yes, in the domestic market. SEBI's guidelines for research analysts, issued on 8 January 2025, treat model portfolios as research services and require a research report for each one. In GIFT City, model portfolios are not permitted today, and IFSCA's November 2026 proposal would allow registered research entities there to offer them.
Can resident Indians invest in GIFT City under the LRS?
Yes. The RBI's circular of 10 July 2024 allows resident individuals to remit to IFSCs such as GIFT City under the LRS to invest in securities and to use financial products and services under the IFSCA Act, 2019. The overall LRS limit is USD 250,000 per person in each financial year.
Does TCS apply to money sent to GIFT City for investment?
Yes, when the money is sent under the LRS. Under Section 394 of the Income-tax Act, 2025, TCS of 20 per cent applies to LRS remittances above ₹10 lakh in a tax year for purposes other than education or medical treatment. The client can claim the TCS as a credit in their income tax return.
What are the risks of following a model portfolio?
The client carries the full risk of the securities, including loss of capital, currency movements and concentration in one theme or region. Late or partial rebalancing can leave holdings different from the model, and trading costs add up over time. A research report explains the reasoning, but it does not make the investment safe or suitable.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
