Amendments to IFSCA Fund Management Regulations 2025: What They Mean for GIFT IFSC

The International Financial Services Centres Authority (IFSCA) has approved several amendments to the IFSCA (Fund Management) Regulations, 2025, aimed at facilitating ease of doing fund management business in GIFT IFSC, strengthening investor protection through enhanced disclosures and providing greater regulatory clarity.

The amendments follow feedback received through Chintan Shivir, interactions with industry participants, supervisory experience, public consultation and recommendations of the Fund Management Advisory Committee.

For the evolving GIFT City Fund Management ecosystem, the changes address areas including valuation, Fund Management Entity (FME) contributions, Venture Capital Schemes, Retail Schemes, disclosures, annual reporting and regulatory governance.

Greater Flexibility in Fund Valuation

One of the amendments focuses on reducing operational requirements for FMEs.

For close-ended Restricted Schemes, the periodicity for computation and disclosure of Net Asset Value (NAV) may be enhanced from semi-annual to annual, subject to prior approval from at least 75% of investors by value of their investments.

The requirement for independent valuation of investments in Venture Capital Schemes, Restricted Schemes and Retail Schemes is also relaxed where the underlying scheme is independently valued.

These changes can provide greater operational flexibility within the GIFT City Fund Structure while retaining investor approval and valuation safeguards.

Higher Contribution Limit for Eligible FMEs

The amendments also revise contribution requirements for certain Fund Management Entities and their associates.

FMEs and associates having Indian ultimate beneficial owners will be permitted to contribute up to 25% of the corpus of Venture Capital Schemes and Restricted Schemes, instead of the existing 10% limit, where the schemes invest only in IFSCs or foreign jurisdictions.

The change is intended to facilitate FMEs in building a track record of performance in overseas markets.

This could be relevant for a GIFT City Fund Manager seeking to develop experience through international investment strategies.

Changes for Index and Fund of Funds Schemes

The exemption from minimum contribution requirements for FMEs and their associates has also been expanded to certain Restricted and Retail Schemes that are Index Schemes or Fund of Funds Schemes investing in Index Schemes or passive ETFs, subject to appropriate disclosures.

For Fund of Funds schemes, the automatic exemption applies where no active fund management is involved.

These provisions provide additional clarity around fund structures while maintaining disclosure requirements.

More Flexibility for Venture Capital Schemes

The amendments allow Venture Capital Schemes to participate in subsequent fundraising rounds by their investee companies even after those companies have completed ten years from incorporation, subject to specified conditions.

For the GIFT City VC Fund ecosystem, this provides additional flexibility in supporting investee companies through later stages of fundraising.

Changes for Retail Schemes

The amendments also provide an exemption from existing sectoral concentration limits for Retail Fund of Funds Schemes investing in underlying schemes that are regulated by the relevant financial sector regulator and permitted to be offered to retail investors in their home jurisdictions.

This provides greater clarity for specific Fund of Funds structures while retaining the requirement that the underlying schemes are appropriately regulated and permitted for retail investors in their home jurisdictions.

Stronger Disclosures and Investor Protection

The amendments are not limited to operational flexibility.

For Retail Schemes, the indicative disclosure requirements in the Offer Document will be expanded to include information regarding the methodology of NAV computation and conflicts of interest.

The amendments also require various internal policies and frameworks established by FMEs under the Fund Management Regulations to be approved by the governing body of the FME or appropriately delegated committees or officials.

These measures reinforce the investor protection and governance aspects of GIFT City Fund Management.

Extended Annual Report Timeline

The timeline for submission of annual reports of schemes to the Authority and investors will be extended from four months to six months from the end of the financial year.

The amendment provides additional time for FMEs and schemes to complete the annual reporting process while maintaining the requirement to provide the information to the Authority and investors.

Regulatory Framework for Differential Distribution

Alongside the amendments, IFSCA has approved an enabling provision and regulatory framework for differential distribution in Restricted Schemes and Venture Capital Schemes to facilitate blended finance and other fund structures.

Under the framework, Venture Capital Schemes and Restricted Schemes may issue multiple classes of units with differential distribution rights.

Junior or subordinate classes may carry lower returns or bear higher losses than their entitlement.

For ESG Schemes, funds may also be accepted from investors in the form of grants, subject to specified conditions. The Private Placement Memorandum (PPM) must clearly disclose the different unit classes, their distribution rights and associated risks.

What These Changes Mean for GIFT IFSC Fund Management

The amendments collectively seek to make fund management activities in GIFT IFSC easier to operate while strengthening disclosures, investor protection and regulatory clarity.

For global fund management GIFT City ambitions, the changes provide greater flexibility across valuation, contributions, Venture Capital Schemes, Retail Schemes and fund structures.

The amendments also demonstrate an approach that combines operational flexibility with appropriate governance and investor safeguards.

Key Industry Insights on IFSCA Fund Management Amendments

The latest amendments aim to facilitate ease of doing fund management business in GIFT IFSC, while strengthening investor protection through enhanced disclosures and providing greater regulatory clarity.

Industry Insight	Business Significance
NAV computation and disclosure periodicity for certain close-ended Restricted Schemes can be enhanced from semi-annual to annual, subject to 75% investor approval by value.	Provides operational flexibility while retaining an investor-consent safeguard for the change in NAV periodicity.
Independent valuation requirements are relaxed where the underlying scheme is independently valued.	Can reduce duplication in valuation processes for Venture Capital, Restricted and Retail Schemes while retaining valuation oversight.
Eligible FMEs and associates with Indian ultimate beneficial owners may contribute up to 25% of the corpus in specified Venture Capital and Restricted Schemes, compared with the earlier 10% limit.	Provides greater flexibility for eligible FMEs to build a performance track record in IFSCs and foreign jurisdictions.
Minimum contribution exemptions are expanded to certain Index Schemes and Fund of Funds Schemes investing in Index Schemes or passive ETFs, subject to disclosures.	Creates additional flexibility for specified passive and fund-of-funds structures while maintaining transparency requirements.
Venture Capital Schemes may participate in subsequent fundraising rounds by investee companies after ten years from incorporation, subject to specified conditions.	Allows qualifying VC schemes greater flexibility to continue supporting investee companies during later fundraising stages.
Specified Retail Fund of Funds Schemes receive an exemption from existing sectoral concentration limits when investing in appropriately regulated underlying schemes.	Provides greater structural flexibility for qualifying Retail Fund of Funds arrangements.
Retail Scheme Offer Documents will include additional information on NAV computation methodology and conflicts of interest.	Strengthens investor disclosures and provides investors with greater clarity on valuation and potential conflicts.
Internal policies and frameworks established by FMEs are required to be approved by the governing body or appropriately delegated committees or officials.	Reinforces governance and accountability within Fund Management Entities.
The annual report submission timeline for schemes is extended from four months to six months from the end of the financial year.	Provides FMEs and schemes additional time to complete annual reporting while retaining reporting obligations to the Authority and investors.
IFSCA has approved an enabling provision and regulatory framework for differential distribution in Restricted Schemes and Venture Capital Schemes.	Creates a framework for multiple unit classes with differential distribution rights and supports blended finance and other fund structures.
ESG Schemes may accept funds from investors in the form of grants, subject to specified conditions.	Provides an additional mechanism for eligible ESG-oriented fund structures while requiring appropriate disclosure.
Private Placement Memorandums must disclose different unit classes, their distribution rights and associated risks under the differential distribution framework.	Improves transparency for investors by clearly communicating class-specific economics and risks.

How Gift CFO Can Help

Gift CFO supports businesses, fund managers and financial institutions with GIFT IFSC advisory, fund management structuring, regulatory compliance and entity setup.

Our team can assist organisations in understanding the evolving IFSCA Fund Management Regulations, evaluating suitable fund structures and navigating regulatory requirements for establishing or operating fund management activities in GIFT IFSC.

Conclusion

The amendments to the IFSCA (Fund Management) Regulations, 2025 introduce greater flexibility across valuation, FME contributions, Venture Capital Schemes, Retail Schemes, disclosures and reporting, while continuing to strengthen governance and investor protection.

For fund managers and businesses evaluating opportunities within GIFT City Fund Management, these changes provide greater regulatory clarity and flexibility for developing and managing different fund structures.

The introduction of a framework for differential distribution and blended finance further expands the possibilities available to qualifying fund structures. As the GIFT IFSC fund management ecosystem continues to develop, understanding these regulatory changes will be important for entities planning their fund management activities.

DISCLAIMER: This article is published for informational, educational, and analytical purposes only. It does not constitute legal advice, regulatory guidance, trade compliance advice, or a solicitation of any kind.

All information in this article is based on IFSCA Circular No. IFSCA-PMTS/10/2023-Precious Metals/2026/2 dated 15th June 2026, issued under Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019, read with Regulation 78 of the IFSCA (Bullion Market) Regulations, 2025. This circular amends the original Circular dated 10th October 2025 on import of gold or silver by Qualified Jewellers and valid India-UAE CEPA TRQ holders through IIBX, as previously updated on 2nd January 2026.

References to DGFT Notifications 17/2026-27 (dated 16th May 2026) and 19/2026-27 (dated 2nd June 2026) are based on information contained within the IFSCA circular. Readers should independently verify the full text of these DGFT notifications for complete details.

A separate, updated Consolidated Circular incorporating these amendments is being issued by IFSCA. Readers should refer to the official, most current Consolidated Circular available at www.ifsca.gov.in under Legal Framework → Circulars for authoritative and up-to-date compliance requirements.

Eligibility for Qualified Jeweller notification, import authorisation requirements, and applicable policy conditions may vary based on entity type, SEZ status, ITC(HS) classification, and other factors specific to each applicant. Entities are strongly advised to consult qualified legal, customs, trade compliance, and tax professionals before undertaking any bullion import transaction through IIBX.

The publisher is not a law firm, customs broker, or IFSCA-regulated entity. Nothing in this article constitutes legal or regulatory advice