GIFT City AIF: Alternative Investment Funds in GIFT IFSC Explained
By Anup Vatyani, AMFI-registered Mutual Fund Distributor (ARN 106715)
Last reviewed October 2026
The short answer. An alternative investment fund (AIF) in GIFT City is a pooled fund for strategies outside ordinary mutual funds, such as private credit, long-short equity or venture capital. It is set up under the IFSCA (Fund Management) Regulations, 2025, usually as a restricted scheme with a minimum of about USD 150,000, and invests mostly in US Dollars. It suits experienced investors with large amounts who can accept lock-ins.
GIFT City AIFs vs SEBI AIFs
| GIFT City AIF | SEBI AIF (domestic) | |
|---|---|---|
| Regulator | IFSCA | SEBI |
| Classification | Venture capital scheme or restricted scheme | Category I, II or III |
| Currency | Usually USD | INR |
| Typical minimum | USD 150,000 (accredited investors may be exempt) | ₹1 crore |
| Minimum fund size | USD 3 million (reduced from USD 5 million in 2025) | Set by SEBI per category |
| Can invest abroad | Yes, freely | Within SEBI's overseas limits |
| Resident Indians invest via | LRS (with TCS above ₹10 lakh) | Rupee payment |
Common GIFT City AIF strategies
- Private credit: lending to companies, often with fixed coupons and a lock-in.
- Long-short and absolute return equity: aiming for returns less tied to the market.
- Venture capital and private equity: investing in unlisted companies, with long holding periods.
- Fund of funds: investing in other funds, in India or abroad.
How investing in a GIFT City AIF works
- 1
Check eligibility
Minimum, investor type, country
- 2
Read the placement memorandum
Strategy, fees, lock-in, risks
- 3
KYC and commitment
Sign the contribution agreement
- 4
Fund in USD
Residents under LRS; NRIs from abroad
- 5
Track and exit
Statements, distributions, redemption terms
Compare with GIFT City PMS, feeder funds and the full list of minimum investment amounts.
Common questions
What is a GIFT City restricted scheme?
A restricted scheme is the IFSCA scheme type used by most GIFT City AIFs. It is open only to accredited or high-ticket investors, commonly with a USD 150,000 minimum, and its placement memorandum is filed with IFSCA.
What is a GIFT City AIF?
A GIFT City AIF is an alternative investment fund set up in GIFT IFSC under IFSCA's fund management regulations, usually as a restricted scheme or a venture capital scheme. It pools money from eligible investors for strategies such as private credit, long-short equity or start-up investing, mostly in US Dollars.
What is the minimum investment in a GIFT City AIF?
Commonly USD 150,000 per investor for restricted schemes, with exemptions for accredited investors. Venture capital schemes also have high minimums. The scheme's placement memorandum states the exact figure.
Are GIFT City AIFs Category I, II or III?
No. Category I, II and III are SEBI's classes for domestic AIFs. IFSCA uses scheme types instead (venture capital and restricted schemes). A GIFT City AIF may follow a strategy similar to a SEBI category, but it is regulated differently.
Can resident Indians invest in a GIFT City AIF?
Yes, under LRS, if the scheme accepts them and they meet the minimum. The investment counts towards the USD 250,000 annual LRS limit and attracts 20% TCS above ₹10 lakh a year, which is claimed back in the return.
What should I check before investing in a GIFT City AIF?
The Fund Management Entity's IFSCA registration, the strategy, lock-in and exit terms, fees including any performance fee, how often valuations are reported, and the tax treatment in India and your country of residence.
Official sources
Rules change. Check the current position with the authority that sets it.
- IFSCA — International Financial Services Centres Authority — The regulator for all financial services in GIFT IFSC.
- IFSCA Directory of regulated entities — Check that a Fund Management Entity is registered.
- RBI — FAQs on the Liberalised Remittance Scheme — The annual limit and permitted purposes for resident Indians.
- SEBI — Securities and Exchange Board of India — The regulator for domestic Indian mutual funds.
Have a question about how this works?
Anup Vatyani explains GIFT City fund structures and the investment process in plain English. Educational conversation only, not personalised advice.
Talk to AnupThis page is educational and is not investment, tax or legal advice. Figures and rules are as understood at the date shown and can change; check the official sources and the scheme's offer documents. Investments are subject to market risks; read all scheme-related documents carefully.