Third-Party Fund Management in GIFT IFSC: Evaluating Benefits and Drawbacks of Platform Play

The International Financial Services Centres Authority (IFSCA) has introduced a progressive framework that allows Fund Management Entities (FMEs) to launch schemes on behalf of third-party managers. This model – often called the “Platform Play” – is designed to make GIFT City a global hub where ideas meet infrastructure, and managers meet markets.

But what does this mean in practice? And more importantly, what should fund managers and investors watch out for? Let’s break it down.

Why Platform Play is a Game-Changer

Plug-and-Play for Global Managers

• Imagine being a successful fund manager in Singapore, Dubai, or London. Instead of spending months setting up an IFSC presence, you can now collaborate with a registered FME and launch your scheme in India within weeks. This is speed and access rolled into one.

Efficiency Meets Scale

• FMEs already have compliance, risk management, and operational setups. By using them as a launch platform, fund managers cut costs and focus on their core strength – managing money. For FMEs, it’s a new revenue stream and a chance to host multiple funds on their “platform.”

Investor Confidence Built In

• With IFSCA mandating disclosures, risk frameworks, and strong fiduciary oversight, investors are assured that their money is being managed under the same standards of care – whether it’s a self-managed scheme or a third-party scheme.

The Flip Side – What to Watch Out For

Like any new model, Platform Play has its challenges.

Compliance Load:

• Even if the fund is managed by a third-party, the liability stays with the FME. Think of it like hosting a tenant – if they break the rules, the landlord still answers the regulator.

Capital Requirement:

• To play this game, FMEs need to lock an additional USD 500,000 in net worth. It’s a clear signal from IFSCA – only serious players are welcome.

Operational Complexity:

• FMEs will need dedicated Principal Officers and separate compliance teams for retail vs non-retail funds. It adds layers of cost and oversight.

Restricted Scheme Limits:

• Each fund is capped at USD 50 million (unless revised). Great for boutique and mid-sized managers, but large institutions may find it limiting.

Reputational Risk:

• One weak partner can damage the brand of a strong FME. Hence, due diligence on fund managers isn’t just a checkbox – it’s survival.

The Bigger Picture

Platform Play is more than just regulation. It’s a strategic bridge – connecting global fund managers with Indian and IFSC investors, while empowering FMEs to become the “launchpads” of global capital.

• For investors, it means more variety and innovation in fund products.

• For FMEs, it means new business lines and a chance to scale faster.

• For global managers, it means seamless access to one of the fastest-growing investment hubs.

Final Word

In simple terms, Platform Play is like Netflix for funds – where FMEs are the platform and fund managers are the content creators. It brings together global talent, local trust, and regulatory safety under one roof.

But like every platform business, success will depend on trust, quality, and strong governance. Those who can balance opportunity with responsibility will lead the way in GIFT IFSC’s next chapter.