By Khushboo Chopra, Head of Business Development, IQ-EQ, India
India’s alternative investment fund (AIF) industry is no longer operating on the fringes of the financial system. It’s stepping into a central role, driven by a convergence of maturing investor appetite, global capital flows, and a regulatory environment that is increasingly aligned with innovation and transparency. What was once a niche segment is now becoming a cornerstone of modern portfolio construction, with Indian AIFs having seen total commitments surge to INR 14.2 trillion (USD 160.8 billion) as of June 2025, growing 20% year on year.
Technology as the new engine of fund management
The most transformative force reshaping the AIF landscape is technology. It’s not just about digitising processes but about reimagining how funds are managed, scaled and experienced.
Digital platforms are streamlining investor onboarding and enhancing transparency across the investment lifecycle. For example, 48% of key industry players in India adopted artificial intelligence (AI) in financial year 2024, with banking, financial services and insurance leading the way at 68% adoption. Automation is taking over repetitive tasks, allowing fund managers to focus on strategy rather than operations. AI is beginning to influence how portfolios are constructed and risks are assessed, offering a level of precision and foresight that was previously out of reach. Across India, about 26% of companies report that they’ve gone beyond pilot projects and are maximising value from AI initiatives, outperforming the global average.
Beyond the front office, intelligent systems are optimising compliance, reporting and communication. Compliance and financial risk teams show especially high adoption: approximately 80% of Indian financial institutions now employ AI or advanced analytics in compliance and financial crime monitoring. These tools are not just improving efficiency but are building trust. As the industry grows in complexity, the ability to manage unstructured data, validate information in real time, and deliver insights quickly is becoming a competitive advantage.
Globally, innovations like tokenisation and blockchain are beginning to influence how alternative assets are structured and traded. These technologies promise greater liquidity and transparency – two qualities that have historically been elusive in the alternatives space.
A broader investor base
The profile of the AIF investor is also evolving. What was once the domain of institutions is now attracting family offices, high-net-worth individuals (HNWIs) and private wealth managers; investments by HNWIs in AIFs had risen to INR 5.38 trillion (USD 60.7 billion) by March 2025, up 32% year on year. These investors are looking beyond traditional asset classes, seeking exposure to private markets that offer differentiated returns and long-term value as they now account for 80 to 90% of funds raised.
This shift is not just about chasing yield. It reflects a deeper understanding of portfolio diversification and a growing confidence in the governance and performance of AIFs. Liquidity events, such as promoter stake sales and employee stock ownership plan (ESOP) monetisation, are also channelling fresh capital into the space, reinforcing its relevance in wealth management strategies.
Private credit as a rising force
Private credit is emerging as one of the most dynamic segments within the AIF universe, accounting today for roughly 15% of total AIF commitments (INR 1,95,000 crore / USD 22 billion). The surge in deal activity reflects a broader trend: investors are increasingly comfortable with bespoke, yield-oriented strategies that offer a balance of risk and return.
What’s notable is the growing role of domestic capital in this space. Indian investors are not just participating, they’re leading. This signals a maturing market where local players are shaping the narrative, not just following global trends.
GIFT City: India’s global gateway and bridge to global capital
GIFT City is fast becoming India’s global gateway, already home to over 80 fund managers managing USD 30 billion in assets through its International Financial Services Centre (IFSC) and backed by a survey showing 49% of senior financial executives see very high growth potential in the city. Recent regulatory reforms have made it easier for fund managers to operate with agility and reach a global investor base. Lower entry thresholds, relaxed investment norms, and the ability to market overseas without bureaucratic friction are making the GIFT IFSC a compelling destination.
This is more than a policy shift; it’s a signal that India is ready to compete on the global alternatives stage. With its forward-looking policies and commitment to ease of doing business, GIFT City is poised to play a pivotal role in shaping the future of India’s fund management landscape and drawing global investments.
Regulation as an enabler
The Securities and Exchange Board of India (SEBI)’s evolving framework for AIFs goes beyond mere oversight, aiming to foster innovation while protecting investor interests. The emphasis on fairness, transparency and operational flexibility is helping build a more resilient and inclusive industry.
New provisions around co-investment vehicles, drawdown management and fund structuring are giving managers the tools they need to respond to market realities without compromising governance. These changes reflect a regulator that is listening, learning and leading.
The road ahead
India’s AIF industry is at a pivotal moment. Technology is redefining what’s possible. Investors are more engaged and informed. Regulation is moving in step with innovation. Together, these forces are pushing alternatives from the margins to the mainstream.
The next phase of growth will not be defined by scale alone, but by the industry’s ability to deliver value with agility, intelligence and integrity. For those ready to lead, the opportunity is not just to participate but play an active role in shaping the future of capital.
Speak to us
IQ-EQ India is well-equipped to address the evolving needs of the fund administration landscape. We’ve invested heavily in developing comprehensive capabilities to support clients in both the domestic Indian market and GIFT IFSC across various AIF categories. Providing end-to-end services that cover the necessary scope of work, we ensure a consistent experience through a unified technology platform, complete with professional resources and robust processes.
Click here to find out more about our service expertise in India and get in touch with our team today.
