By Atul Muchhala, Country Head, India
The exponential growth of the alternative funds sector in India is significantly increasing the need for skilled fund administration service providers. In this article, we examine the current state of outsourced fund admin in India versus what fund managers need and should expect from fund administrators as the industry continues to evolve.
India’s alternative funds industry has witnessed remarkable growth over the past decade. As of 31 March 2025, total commitments raised exceeded US$157 billion. The Gujarat International Finance Tec (GIFT) City jurisdiction is also expanding rapidly. Fund managers, or general partners (GPs), are now offering a diverse range of strategies, including private equity, private debt, structured credit, real assets, public markets, funds of funds and special purpose vehicles, which are all becoming increasingly popular.
Interestingly, while alternative investment funds (AIFs) were once aimed primarily at offshore institutional investors and ultra-high-net-worth individuals or family offices, domestic investors are now making up 63% of the total funds raised in AIFs. This shift shows a growing interest as well as increased availability of investable funds in India. The Reserve Bank of India (RBI) has encouraged investment abroad, leading fund managers to focus on wealthy family offices in India that want to diversify their portfolios for better returns while managing their risks.
In this context, fund managers are increasingly adopting global best practices to improve their operational efficiency and align with international standards. This shift is essential because unique fund structures and diverse investment strategies create operational complexity. Moreover, heightened regulatory compliance requirements from both regulators and institutional partners necessitate a professional set-up that goes beyond traditional fund accounting.
In the face of such complexities, the need for independence and transparency, and the heightened expectations of investors and other stakeholders, GPs are increasingly recognising the value of working with an experienced fund administrator as a strategic partner. Such a partnership is crucial not only for local operations in India and GIFT City, but also for international activities through feeder structures. Hiring a dedicated administration firm also frees managers to focus on their core activities, such as fundraising and managing investments, rather than getting overwhelmed by administrative tasks.
Fund administrators as strategic partners throughout the investment lifecycle
Beyond increasing recognition of the value that fund administrators can add, as interest in alternative investments continues to rise in India, the role of fund administrators is changing. These professionals are now expected to provide a far wider range of services to meet managers’ evolving needs.
Fund administrators with the right mix of expertise are increasingly responsible for regulatory assistance, helping fund managers navigate various registration platforms such as SCORES, online dispute resolution (ODR), InVI and FLAIR to ensure smooth fund operations and compliance with legal requirements. They may also manage the registration of fund units and oversee escrow accounts until all investors receive their allotted units, which is essential for maintaining investor confidence and operational integrity.
In addition to their main duties, fund administrators can play an important role in ensuring compliance with GIFT International Financial Services Centre (IFSC) jurisdictional requirements. This includes completing necessary registrations like ICEGATE and the Registration-cum-Membership Certificate (RCMC), also supporting International Financial Services Centres Authority (IFSCA) reporting. Fund administrators can hold responsibility for making sure all reports are filed with the right regulatory authorities according to the specific needs of each fund. They act as a single point of contact, coordinating with various stakeholders, including registrars, compliance officers and custodians across different jurisdictions, which helps streamline communication and improve operational efficiency.
With the right fund administrator on board, additional support can include maintaining records of portfolio companies and collecting performance data. For Category-3 structures, expert administrators can manage trade capture, settlement, corporate actions, pricing, reconciliations and daily reporting regardless of the frequency of net asset value (NAV) reporting. They can also hold responsibility for finalising financial statements in both the fund’s book currency and Indian Accounting Standards (INR) for local regulatory filings. Additionally, they can assist with outbound fund management by tracking liberalised remittance scheme (LRS), overseas portfolio investment (OPI), ensuring compliance with RBI and Foreign Exchange Management Act (FEMA) regulations. Their role can extend to conducting independent due diligence and reviewing private placement memorandums (PPMs) for audit purposes. They may also represent the fund at board meetings and annual investor gatherings. And with increasing tax compliance requirements, an AIF may also look to its fund administrator to handle tax computations and file income tax returns, preferring to work with a single business partner for all its administration, compliance and reporting needs.
To keep pace with the rapidly changing regulatory environment, fund administrators must continuously monitor changes in the AIF landscape and update fund managers on the implications of changes. They ideally need to be able to provide real-time support across various worldwide regions, enabling fund managers to make timely decisions based on accurate and up-to-date information. There is also growing demand for fund administrators able to offer a unified technology platform spanning different categories of AIF to provide a seamless experience for investors, distributors and third parties.
Additionally, fund administrators are increasingly expected to support other operations including treasury activities, foreign exchange hedging, vendor management and legal contract management, making them truly indispensable partners throughout the entire lifecycle of the fund.
Is India’s fund administration sector ready for this?
All of the above presents a big ask for fund administrators. Despite the growing demand for sophisticated fund administration services, the industry in India is still in its early stages. Currently, fund administrators are not regulated domestically, although they must obtain a licence from IFSCA to operate in GIFT IFSC, and there is no regulatory requirement for funds to appoint an independent administrator for NAV calculations and reporting.
This gap in regulation has led to the rise of non-institutional firms that may not have the necessary resources or capabilities to meet the changing demands of the funds industry. Meanwhile, other ecosystem players such as trustees and custodians offer fund accounting as an ancillary service, which may not meet clients’ expectations for a comprehensive fund administration offering.
Speak to IQ-EQ
Thankfully, certain fund administrators have the global presence and depth of expertise to assist across all areas mentioned. 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.
