In a recent policy push to deepen and globalize India’s financial ecosystem, the International Financial Services Centres Authority (IFSCA) has allowed third-party fund management services to fund management entities which includes mutual funds, PMS and AIFs.
The government announced this decision with a Gazette notification dated July 24, 2025, which aims to position GIFT IFSC as a global asset management hub by allowing international fund managers to outsource fund operations to India-based entities.
The amendment introduces a new Part D to the IFSCA (Fund Management) Regulations, 2025, enabling FMEs to launch and manage schemes on behalf of third-party fund managers.
Until now, Fund Management Entities (FMEs) could only run funds under their own banner. After this change, global asset managers can choose to operate fund and portfolio management in GIFT City, while maintaining ownership and branding of their schemes.
Qualification for third party fund management
Should be incorporated in India, an IFSC, or any foreign jurisdiction
Should be registered or regulated in its home country for asset/fund/portfolio management or advisory
Should allocate adequate resources and have qualified personnel
Compliance and responsibilities
Should maintain a separate net worth of at least USD 500,000 for third-party mandates
Appoint dedicated principal officers for each scheme
Segregate funds and ensure operational independence from third-party influence
Disclose third-party roles, potential conflicts of interest and accountability structures clearly in the placement memorandum
Monitor third-party performance and retain ultimate responsibility for compliance and investor protection
Legal form & structure
According to the Gadget notification, the entities seeking to operate as FMEs under this model must be established as a company, LLP or other approved legal entity in the IFSC with appropriate authorization documents (MoA or LLP agreement) explicitly enabling third-party fund management.
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