GIFT City third party fund management lets a manager launch a fund without registering its own Fund Management Entity (FME). A Registered FME authorised for “third-party fund management services” sets up and manages the fund as a restricted scheme, which is filed as a Category I, II or III AIF (Reg. 30(1), FM Regulations 2025). SEBI-registered Indian managers and managers regulated in a qualifying foreign jurisdiction can qualify as third-party fund managers (Regs. 107B, 107H).

The rules are in Part D of Chapter VI of the IFSCA (Fund Management) Regulations, 2025 (Regs. 107A–107M). The route is open only to managers already regulated in their home country, only for restricted schemes (AIFs), and only up to a corpus of USD 50 million per scheme.

Investment decisions must still come from the IFSC. The arrangement does not by itself permit fully offshore investment management. Reg. 7(7) requires portfolio proposals to be initiated by a person based in the FME’s IFSC office, and item (f) of the First Schedule is an undertaking that investment decisions and portfolio management will be carried out from the IFSC. Part D does not expressly disapply either (see the unsettled point below).

Table of Contents

GIFT City third party fund management: where the rules come from

Part D was inserted by the IFSCA (Fund Management) (Amendment) Regulations, 2025. IFSCA’s consolidated text, as amended up to 10 September 2026, shows it in force from 30 July 2025. The two 2026 amendments did not change the text of Part D, though the Second Amendment changed the “associate” definition (Reg. 2(1)(d)) and Reg. 40, which Part D relies on. The wider IFSCA framework is described on the IFSCA regime page. IFSCA has since issued circulars on fees (8 September 2025, folded into the general fee circular that applies from FY 2026-27) and on how to file schemes (16 January 2026).

The Regulations use two defined terms (Reg. 107B):

Third-party fund management services: a Registered FME managing schemes “on behalf of a third-party”.
Third-party fund manager (TPFM): an entity “registered or regulated, for the purposes of fund management, portfolio management, investment advisory or any other similar activity” by the financial sector regulator of the country where it is incorporated, which uses those services.

Who can be the GIFT City fund platform

Category. The platform must be a Registered FME, either Non-Retail or Retail (Reg. 107B(i)). Authorised FMEs cannot offer the service. IFSCA’s FAQ table marks third-party fund management “No” for them (FAQ Q4).
Authorisation. The FME needs a separate authorisation from IFSCA under Part D (Reg. 107C(1)).
Legal form. It must be a company or LLP in the IFSC, or another form IFSCA permits. Its memorandum or LLP agreement must expressly allow third-party fund management (Reg. 107D). Part D does not list branches, so the position of a branch FME is not addressed in the text.
Extra net worth. It must hold an additional USD 500,000 at all times. This is on top of its category net worth and any net worth for other activities (Reg. 107F). For a Registered FME (Non-Retail), the total is therefore at least USD 1 million (USD 500,000 under the Second Schedule plus USD 500,000 under Reg. 107F).
Compliance resources. It must strengthen its compliance function and resource it “commensurate to the size of its operations in the IFSC”, so that every scheme gets enough compliance attention (Reg. 107C(2)).

The platform can still run its own schemes and PMS alongside its third-party business (Reg. 107C(1), Explanation).

Who can use a platform: SEBI-registered and foreign managers

The third party must be a TPFM, as defined above, and must meet four conditions (Reg. 107H):

It is incorporated in India, the IFSC or a “foreign jurisdiction”.
It allocates adequate resources to its functions.
The people responsible for those functions have the necessary experience.
The TPFM, its officers, directors or partners, KMPs and controlling shareholders are fit and proper under Reg. 9.

“Foreign jurisdiction” is a defined term (Reg. 2(1)(m)). The country’s securities regulator must be an Appendix A signatory to the IOSCO MMoU or have a bilateral MoU with IFSCA. The country must also not be on the FATF lists of jurisdictions with strategic deficiencies. Whether a manager in the UK, US, Singapore or UAE qualifies depends on whether its country meets this test.

On the text, an Indian manager registered with SEBI, such as an AIF manager, portfolio manager or investment adviser, falls within the definition because it is incorporated in India and regulated by SEBI. How a SEBI AIF compares with a GIFT City fund is covered in AIF Registration: SEBI AIF or GIFT City Fund?. A TPFM qualifies even if its parent group is not in fund management (Reg. 107H, Explanation).

The exclusion in Reg. 107M. Part D “shall not be applicable” to schemes where the FME’s own parent or associate provides fund-management support or advice. A group that wants its own IFSC subsidiary advised by the parent therefore falls under the ordinary rules, not Part D.

What can be launched

Restricted schemes only, managed under Part B of Chapter III (Reg. 107G(1)). The usual restricted-scheme rules apply: accredited investors or a USD 150,000 minimum, up to 1,000 investors, a minimum corpus of USD 3m, Category I, II or III, and a 12-month PPM. The categories are compared in Category I, II and III AIFs in GIFT City.
Corpus cap of USD 50 million per scheme, “or such other value as may be specified by the Authority” (Reg. 107G(1), proviso). Part D sets no aggregate cap on a platform’s or a manager’s third-party schemes. No circular setting a different figure was found.
Not covered: venture capital schemes (Part A) and retail schemes (Part C). Part D does not mention special situation funds, which are a “category under restricted schemes” in Part D of Chapter III (Reg. 60(2)). Whether they can be launched on a platform is unclear.

The TPFM is treated as an associate of the platform FME for three rules (Reg. 107G(2)):

investing in associates needs approval from 75% of investors by value (Reg. 35(3));
buying or selling with associates needs the same approval (Reg. 35(4));
the sponsor contribution (Reg. 40).

In practice, the TPFM can provide the sponsor commitment. For a close-ended scheme, that is the lower of 2.5% of corpus or USD 750,000. For an open-ended scheme, it is the lower of 5% of corpus or USD 1.5m. In both cases the cap is 10% of corpus, with the exceptions in Reg. 40(1), and the waivers in Reg. 40(4) remain available. The flip side is that dealings with the TPFM, and with schemes the TPFM manages, need the 75% investor approval under Regs. 35(3)–(4). Its portfolio companies are caught only if they are associates under Reg. 2(1)(d). The tax treatment of the fund and its manager is a separate question; see GIFT City Tax Benefits for Funds and Fund Managers.

Responsibilities and liability

Part D leaves regulatory liability with the platform:

The schemes are “treated to be the schemes of the FME” (Reg. 107K(1)(b)).
The FME stays liable for “any and all obligations or liabilities” arising from the arrangement, “notwithstanding any arrangement… including the indemnification arrangement” (Reg. 107C(4)).
The FME is “responsible for all the acts of omissions and commission” of the TPFM (Reg. 107K(2)).

This liability to IFSCA and investors is separate from the TPFM’s duties under its contract with the platform. The agreement has to allocate investment authority, compliance, risk, reporting and liability between them.

The platform’s duties include (Regs. 107K(1), 107J):

Onboarding. Check that the TPFM meets Reg. 107H and is qualified, and onboard it “with due care and caution”.
Monitoring. Monitor the TPFM, give it instructions where needed, review its services on an ongoing basis and share the reviews with the fiduciaries.
Contract terms. Keep the right to terminate “at any time” in the interest of investors or on IFSCA’s direction. Require the TPFM to indemnify the FME.
Risk management. Have a dedicated risk framework for third-party risks and conflicts. Keep each scheme’s funds segregated and operationally independent. Extend the investor-complaints process to third-party schemes. Run periodic internal audits and report them to the fiduciaries.

PPM disclosures. The PPM must contain a separate, prominent section that covers (Reg. 107I):

the TPFM and the people who effectively run it;
how responsibilities are split between the FME and the TPFM;
conflicts of interest and how they are handled.

The rest of the FM Regulations apply “mutatis mutandis” (Reg. 107L). This includes the fiduciary rules, the custodian thresholds, independent valuation and reporting.

KMP and substance

The TPFM does not need its own IFSC registration, office or KMPs. The platform carries those requirements:

Principal officer. For each third-party scheme, the FME must appoint a dedicated principal officer responsible for fund management, risk and compliance for that scheme (Reg. 107E(1)).
Compliance officer. In a Registered FME (Non-Retail), the compliance officer for its own schemes can also cover the third-party schemes. In a Registered FME (Retail), the retail compliance officer must be separate from the compliance officer for non-retail schemes (Regs. 107E(2)–(3)).
AUM threshold. Third-party AUM, excluding fund of funds, counts towards the USD 1bn threshold that triggers an extra fund-management KMP (Reg. 107E(4)).

Unsettled point. Part D does not expressly disapply Reg. 7(7) (proposals “initiated by a person who is based in the office of the FME in the IFSC”) or First Schedule item (f), described above. Reg. 107L applies the general provisions “unless specified otherwise”. Until IFSCA clarifies, one possible reading is that the scheme’s IFSC-based principal officer formally initiates and approves portfolio decisions, with the TPFM acting as a recommending adviser, and that this is set out in the PPM’s split of responsibilities. Reg. 107M’s exclusion refers to an “associate” providing advice, and the TPFM is deemed an associate only for Regs. 35(3), 35(4) and 40 (Reg. 107G(2)); this point is not settled in the text.

Fees

IFSCA first set the platform fees in a circular of 8 September 2025. Its fee circular of 2 March 2026 (IFSCA-DTFA/1/2026), corrected on 13 March 2026 (IFSCA-DTFA/2/2026), applies from FY 2026-27 (1 April 2026) (para 16). The 2025 circulars are superseded from then (para 15.1, as corrected). The 2026 circular carries the platform-specific figures forward; the flat FME fee it refers to rose from USD 2,000 to USD 3,000 (Schedule I, Part 2(A), row v):

USD 2,500 application fee and USD 7,500 authorisation fee.
A conditional recurring fee of USD 2,000 a year for each TPFM. It applies for each financial year after the year in which the platform signs the contract with that TPFM (footnote 4), so it is not charged for the contract year. The 2026 circular does not restate the April due date that the 2025 circular gave for this fee.

The per-TPFM fee is paid on top of the USD 3,000 flat recurring fee the platform pays as a registered FME (footnote 5). Each scheme also pays the scheme fees in the same table:

filing fee for a restricted scheme: Category I USD 5,000, Category II USD 10,000, Category III USD 15,000;
annual fee of USD 1,000 per scheme.

The Regulations do not regulate the commercial fee the platform charges the TPFM; that is a matter of contract. Any fees charged to the scheme must appear as separate line items in the PPM (Reg. 128).

Filing a scheme under the arrangement

The 16 January 2026 circular sets out the procedure:

File on SWIT (swit.ifsca.gov.in) in the format required by the scheme-filing circular of 5 April 2024.
Add the third-party documents:
1. the TPFM’s legal name and registered office, with proof of its home-country licence;
1. a look-through chart of the TPFM’s UBOs;
1. profiles of its board or designated partners and its KMPs;
1. its AUM and track record in similar strategies;
1. a declaration and undertaking covering Regs. 107H and 107K;
1. the third-party arrangement agreement;
1. an outline of deal execution, conflicts and the TPFM’s remuneration policies;
1. details of the appointment or change of KMPs (which would include the dedicated principal officer under Reg. 107E(1)).
Once IFSCA takes the PPM on record, the scheme opens for subscription under the green channel for restricted schemes (Reg. 31(2), applied by Reg. 107G(1)).

From 1 December 2026, the platform’s website must list each scheme it manages for a manager based outside the IFSC, with the scheme’s IFSCA registration number (website circular, 26 Aug 2026, para 4(iv)).

Checks when choosing a platform

The requirements above translate into a short list to verify for any platform:

a Registered FME with IFSCA authorisation under Part D (Reg. 107C(1));
the additional USD 500,000 net worth (Reg. 107F);
a dedicated principal officer for each scheme (Reg. 107E(1));
a custodian under Reg. 132 where it applies (Reg. 107L);
its existing third-party schemes, which its website must list from 1 December 2026.

Platform or own FME?

The points below are general observations, not rules.

A platform tends to suit:

a regulated manager testing demand with a first IFSC fund below USD 50m;
a manager whose investors want an IFSC vehicle quickly;
a manager who cannot yet justify an IFSC office, a USD 500,000 net-worth buffer and two IFSC-based KMPs. Those are the core requirements for its own Registered FME (Non-Retail) under Regs. 7, 8 and 10. The registration steps are in GIFT City AIF Setup (2026).

A manager’s own FME tends to suit:

funds expected to exceed USD 50m;
venture capital or retail strategies;
managers who want direct control of investment decisions in the IFSC;
managers whose group would fall within the Reg. 107M exclusion anyway.

Own-FME costs under the 2026 fee circular include a USD 2,500 application fee, a USD 7,500 registration fee (Non-Retail) and a USD 3,000 annual fee, plus office and staff.

Moving to an own FME later. The FM Regulations set out no mechanism for moving a third-party scheme to the TPFM’s own FME once it is registered. Three things would be involved. IFSCA’s approval is needed for any merger or restructuring of schemes (Reg. 130). Investor consent would follow the PPM and contribution agreement. A move could also have tax consequences, which are not addressed here. Material changes must be reported to IFSCA (Reg. 31(4)). The platform agreement and the PPM are where this is dealt with in advance.

Common questions

Can a foreign manager launch a GIFT City fund without its own IFSC registration? Yes, if it is licensed by its home regulator, its home country qualifies as a “foreign jurisdiction”, and the fund is a restricted scheme of up to USD 50m on an authorised platform, with investment decisions still made from the IFSC office (Regs. 107B, 107G, 107H).

Can a SEBI-registered AIF manager use a GIFT City platform? On the text, yes. A manager incorporated in India and regulated by SEBI meets the definition of a TPFM. This does not apply where the platform is the manager’s own associate (Reg. 107M).

Who is liable if the third-party manager gets it wrong? The platform FME remains liable to investors and IFSCA notwithstanding any indemnity; the TPFM must indemnify the FME (Regs. 107C(4), 107K(1)(h), 107K(2)). How responsibility is shared between the two is set by their agreement.

What does a GIFT City fund platform cost? IFSCA charges the platform a USD 2,500 application fee, a USD 7,500 authorisation fee and USD 2,000 a year for each third-party manager (from the financial year after the contract year), plus scheme filing and annual scheme fees. The commercial fee between the platform and the manager is a matter of contract.

Sources

IFSCA (Fund Management) Regulations, 2025, as amended up to 10 September 2026 (consolidated), Part D of Chapter VI (Regs. 107A–107M). IFSCA, 14 Sep 2026. ifsca.gov.in
Fee structure applicable for Third-Party Fund Management Services (F. No. IFSCA-AIF/104/2024-Capital Markets/08092025), superseded from FY 2026-27. IFSCA, 8 Sep 2025. ifsca.gov.in
Procedure and clarification on filing of scheme applications under a Third-Party Fund Management Arrangement (IFSCA/AIF/218/2025-Capital Markets). IFSCA, 16 Jan 2026. ifsca.gov.in
FAQs on IFSCA (Fund Management) Regulations, 2025 (Qs 4, 130–148, 188). IFSCA, 3 Aug 2026. ifsca.gov.in
Fee structure circular (IFSCA-DTFA/1/2025), superseded from FY 2026-27. IFSCA, 8 Apr 2025. ifsca.gov.in
Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC (IFSCA-DTFA/1/2026). IFSCA, 2 Mar 2026. ifsca.gov.in
Requirement for FMEs to maintain a website or webpage. IFSCA, 26 Aug 2026. ifsca.gov.in
IFSCA (Fund Management) (Second Amendment) Regulations, 2026 (amended Reg. 40, used here through Reg. 107G(2)). IFSCA, 31 Aug 2026. ifsca.gov.in
Corrigendum to fee circular (IFSCA-DTFA/2/2026). IFSCA, 13 March 2026. Official URL not located

Launch a GIFT City AIF Without Your Own FME