India’s Position in Offshore Finance: Evidence from International Investment Position Indicator

This paper examines India’s offshore status by analysing the cross-border financial activity using International Investment Position (IIP) based indicators and the role of GIFT IFSC. The study evaluates trends in international banking, external portfolio investment, and offshore mutual fund and asset management activities by employing filtered IIP measures. The findings of the study indicate a significant expansion in India’s global financial linkages, particularly during the post-2020 period, and also an increased participation by non-bank entities. However, the asset composition has been skewed towards liquid instruments, and the liabilities continued to be the dominant part of the external balance sheet. The filtered IIP assets-to-GDP ratio remains relatively low throughout the sample period but exhibits a clear upward trajectory over time, showing increased outward portfolio investment and deeper engagement with global financial markets. The paper concludes that GIFT IFSC represents a hybrid financial centre with offshore characteristics within a regulated domestic framework.