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Several Indian asset managers said they are moving, or planning to move, some offshore fund business from financial centres such as Dubai and Singapore to a finance hub in the western state of Gujarat to gain better access to India's capital markets.

The Indian government is promoting the Gujarat International Finance Tec-City, or GIFT City, as a "gateway for global capital and financial services for the economy" and is trying to attract companies through tax-breaks and other incentives.

In the last six months, about eight of the 10 biggest Indian asset managers by assets have either relocated their business, or set up new funds or filed for permits to move to GIFT City, according to executives at these funds.

"The stable regulatory regime and proximity to the Indian markets is driving our decision," said Swarup Mohanty, chief executive of Mirae Asset Investment Managers, which has shifted a $200 million Hong Kong based fund to GIFT City and is in "active" consideration to move a second fund.

Mirae Asset Investment Managers is the Indian unit of South Korea's Mirae Asset Financial Group.

Mirae expects to manage $435 million out of GIFT City in the near term. The fund has a total of 1.46 trillion Indian rupees ($17.58 billion) of assets under management in India.

GIFT City offers companies that set up there a 10-year tax break and does not charge taxes on transfer of funds from overseas jurisdictions. There are no capital gains taxes for investing in units set at up GIFT City, similar to Singapore or Dubai.

"It is substantially more cost effective to run a fund in GIFT City as compared to Mauritius and Singapore due to lower cost of living, rentals and cost of manpower," said Sachin Samant, president banking and financial institutions group at Kotak Mahindra Bank. The bank has an office at GIFT City and has been helping funds set up their operations there.

DSP Mutual Fund, which manages $20 billion in assets in India and offshore, plans to move its Mauritius-based operation, which manages $450-500 million in assets, to GIFT City by March, said Jay Kothari, a senior vice-president.

Aditya Birla Sun Life AMC, India's sixth largest asset manager with 3.08 trillion rupees under management, is also moving operations from Dubai and Singapore to GIFT City.

"Outside of multiple inbound funds, we have one outbound fund and have an approval to set up an ESG-focused fund with seed investment already in place," said A. Balasubramanian, chief executive for Aditya Birla Sun Life AMC.

Over 80 fund managers with commitments of $30 billion and investments of over $2.93 billion have been set up in GIFT City in the last three years, according to data from the International Financial Services Regulatory Authority (IFSCA), which regulates financial services in GIFT City.

($1 = 83.0290 Indian rupees)