Why AIFs Need Targeted Regulatory Innovations for Next Phase of Growth

To promote growth, India must adopt a clearer taxation regime for AIFs, similar to MFs

- Vikaas M. Sachdeva

Alternative investment funds (AIFs) have evolved from niche offerings to become a cornerstone of India's financial ecosystem. With a remarkable compound annual growth rate (CAGR) of 31% over the past five years and commitments reaching ₹12.4 trillion as of September 2024, AIFs are poised to play an increasingly critical role in reshaping India's investment landscape.

For sophisticated investors, AIFs have become an increasingly important part of their portfolio. As of January 2025, 1,485 AIFs were registered with the Securities and Exchange Board of India (Sebi). However, as the sector grows, the regulatory environment governing AIFs must evolve to not just keep pace with this rapid expansion but also adapt to global trends.