Why the 2025 IFSCA Fund Management Regulations Mark GIFT IFSC's Institutional Coming of Age

There are moments in the lifecycle of a financial centre when incremental progress gives way to structural transformation. The notification of the IFSCA (Fund Management) Regulations, 2025, on February 19, 2025, is one such moment for GIFT IFSC. It marks the point where India's flagship international financial services centre moved decisively from being a promising jurisdiction to being a credible, globally competitive fund domicile.

To understand why this matters, it helps to look at how far GIFT IFSC has come, and how much further the 2025 regulations are designed to take it.

The Foundation: What the 2022 Regulations Built

When IFSCA notified the Fund Management Regulations in April 2022, it was a milestone. For the first time, all fund management activities at GIFT IFSC, venture capital, private equity, portfolio management, and retail funds came under a single, unified regulatory framework, governed by a single regulator. This consolidated approach removed much of the fragmentation that had made IFSC navigation complex for global fund managers.

But the 2022 framework was designed for a nascent ecosystem. By 2025, that ecosystem had grown substantially beyond what the original rules had anticipated.

The fund management industry at GIFT IFSC saw rapid expansion, with the number of registered Fund Management Entities growing to 177 FMEs managing 272 schemes, and cumulative commitments crossing USD 22 billion as of June 2025. The regulatory infrastructure needed to evolve to match this growth.

The 2025 Overhaul: Key Reforms That Signal Maturity

• Reducing the Barriers to Entry

One of the most meaningful changes under the 2025 regulations is the reduction in the minimum corpus size for non-retail schemes, from USD 5 million to USD 3 million. This seemingly technical adjustment carries significant practical implications. It enables smaller fund managers, emerging strategy vehicles, and niche thematic funds to operate from GIFT IFSC without being constrained by high entry thresholds. It aligns GIFT IFSC with global regulatory benchmarks where fund launch flexibility is considered a competitive advantage.

• More Time, More Flexibility

The validity of the Private Placement Memorandum (PPM) has been extended from six months to twelve months, with provisions for further extensions beyond that. For fund managers who understand how capital-raising timelines actually work in practice, often shaped by investor due diligence cycles, market conditions, and internal approval processes, this is a crucial operational improvement. The 2022 framework's shorter timelines were a genuine pain point for FMEs trying to fundraise in competitive global markets.

• Streamlined KMP Governance

Under the 2025 regulations, the appointment of Key Managerial Personnel no longer requires prior IFSCA approval; only an intimation is required. This removes a procedural bottleneck while maintaining accountability. For larger FMEs managing over USD 1 billion in AUM (excluding fund-of-funds), a requirement to appoint one additional KMP within six months adds a proportionate governance layer without burdening smaller entities. The 2025 framework also introduced certification-based alternative eligibility for KMPs, expanding the talent pool FMEs can draw from and making it easier to attract qualified professionals to GIFT IFSC.

• The Third-Party Fund Management Model: A Game-Changer

Perhaps the single most significant innovation under the 2025 framework is the introduction of the Third-Party Fund Management (TPFM) model, notified in July 2025. This platform-play framework allows registered FMEs at GIFT IFSC to launch and manage restricted schemes on behalf of third-party fund managers, without those managers being required to establish physical presence at GIFT IFSC.

This is transformative. It removes a major friction point for international fund managers who want exposure to the Indian market through GIFT IFSC but are not yet ready to commit to setting up full on-ground infrastructure. By enabling a platform-based access model, IFSCA has created a credible on-ramp for global capital,  one that mirrors structures available in more established jurisdictions like Luxembourg and the Cayman Islands.

• Expanded Investment Flexibility

The 2025 regulations also expanded the range of instruments in which both retail and non-retail schemes can invest. The inclusion of bank deposits and overnight schemes as permissible investment avenues improves liquidity management for fund managers, reduces idle cash risk, and brings GIFT IFSC in line with how globally domiciled funds typically operate their cash and treasury functions.

• Building a Global Footprint

In a move that signals GIFT IFSC's ambition to support genuinely global fund management operations, FMEs can now open branches or representative offices in other jurisdictions for marketing and client servicing purposes without prior IFSCA approval; an intimation suffices. This regulatory liberalisation enables GIFT IFSC-based fund managers to build international client relationships and develop cross-border distribution capabilities without bureaucratic delay.

Why This Is an Institutional Coming of Age

The cumulative effect of these reforms is greater than the sum of their parts. What IFSCA has done with the 2025 Fund Management Regulations is reposition GIFT IFSC from a domestic experiment in international finance to a mature, globally aligned, investor-friendly jurisdiction, one that fund managers in Singapore, London, or New York can look at and seriously compare to their existing domicile choices.

The regulatory signals are consistent: lower barriers, greater operational flexibility, stronger investor protections, and an openness to global participation through innovative frameworks like TPFM. Alongside India's broader economic growth story and the Government's Viksit Bharat @ 2047 vision, GIFT IFSC is emerging as a compelling answer to the question global capital has been asking: where in Asia can we base a fund with genuine regulatory confidence?

The answer, increasingly, is GIFT City.

Looking Ahead

IFSCA has already signalled that the evolution is ongoing. The December 2025 amendments approved further rationalisation of compliance requirements, including revival windows for expired schemes, investor protection mechanisms for under-capitalised open-ended schemes, and a migration window for custodian appointments. Each amendment reflects a regulator that is listening to the market and responding with both speed and sensitivity.

For fund managers, institutional investors, global lessors, family offices, and financial intermediaries, the 2025 IFSCA Fund Management Regulations are not just a policy document. They are an invitation.

Ready to explore what GIFT IFSC can do for your fund strategy?

Whether you are setting up a new AIF, registering an FME, or exploring the Third-Party Fund Management framework, our GIFT IFSC advisory experts are here to guide you through every step of the process.

Book a free consultation today and understand how the 2025 Fund Management Regulations open doors for your next fund: info@giftcfo.com | https://www.giftcfo.com/

Disclaimer: This article is intended solely for general informational and educational purposes and does not constitute legal, financial, investment, or regulatory advice of any nature. The information presented is based on publicly available regulatory documents, official IFSCA notifications, and industry sources as of May 2026. While every effort has been made to ensure accuracy, the author and publisher do not warrant the completeness or currency of the information herein. Regulatory frameworks are subject to change; readers are strongly advised to consult qualified legal, financial, or compliance professionals and refer directly to official IFSCA publications before taking any action based on the contents of this article. The views expressed are for analytical purposes only and do not represent the views of IFSCA, the Government of India, or any regulatory authority.