India’s alternative investment funds (AIFs) are gearing up for a blockbuster run, with experts betting on regulatory tailwinds, a booming startup scene, and a swelling pool of wealthy investors to drive higher growth. Commitments have rocketed 340% in six years to ₹12.43 trillion ($142 billion) in the first half of fiscal year 2025 (FY2025), dwarfing mutual funds’ 13% CAGR with a robust 26% annual clip.
Yash Sedani, assistant vice president at 1 Finance, credits the growth in funding to a friendlier regulatory environment. “India’s regulatory environment has increasingly become favourable for AIFs, with measures such as clarity on taxation and granting AIFs Qualified Institutional Buyer (QIB) status,” he said. With India’s initial public offering (IPO) pipeline humming, pre-IPO bets are set to keep the momentum alive, he added.
According to Milan Sharma, director at 35 North Ventures, over the next few years, Indian AIFs are poised to grow exponentially, backed by favourable macroeconomic conditions, regulatory tailwinds, and increased investor participation. SEBI’s tweaks—like better governance and flexible fund structures—are pulling in institutional and retail players, while AI, fintech, and climate tech fuel the opportunity fire, he noted.
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Somdutta Singh, founder and CEO of Assiduus Global, explains that the rise in AIFs can be attributed to the rise in the number of rich individuals. “India’s Alternative Investment Funds (AIFs) are expanding rapidly,” she said, pointing to ₹4.49 trillion raised in H1 FY2025 alone, with real estate snagging 75,468 crore.
With 85,698 high-net-worth individuals (HNWIs) in 2024—up 6% from last year—and a projected 93,753 by 2028, AIFs are riding the wealth wave. “Projections suggest that India’s AIF market could reach $2 trillion by 2034,” she added, fuelled by SEBI’s Specialised Investment Funds (SIFs) and Accredited Investor perks slashing entry barriers.
