The International Financial Services Centres Authority (IFSCA) is currently in talks with the Reserve Bank of India (RBI) to clarify the regulatory implications of a recent FAQ that has caused confusion for funds operating in GIFT City, located in Gujarat, India. The RBI's March 25 FAQ stated that entities in the GIFT International Financial Services Centre (IFSC) must file annual Foreign Liabilities and Assets (FLA) returns if they receive foreign investment or hold overseas assets. This has raised concerns that these funds could be classified as resident Indian entities, conflicting with their current non-resident status under the Foreign Exchange Management Act (FEMA). This distinction is critical as it affects the regulatory and operational advantages that IFSC-based entities enjoy. The FLA return is a mandatory disclosure that provides the RBI with information about foreign investments and overseas assets, essential for compiling India's balance of payments. The alternative investment funds (AIFs) industry has expressed its concerns, with the AIF Chief Financial Officers Association writing to the Department of Economic Affairs to highlight a regulatory overlap and calling for a joint clarification to exempt IFSCA-registered entities from the FLA filing requirement. Currently, GIFT City hosts 314 alternative investment funds across various categories, according to IFSCA data.