Choosing Your FME Category: Authorised vs Registered (Non-Retail) vs Registered (Retail)

If you are a fund sponsor looking at GIFT City, the first real decision you will make is not which scheme to launch - it is which Fund Management Entity (FME) category to register under. Get this wrong and you will either be over-regulated for what you are actually trying to do, or you will hit a wall the moment you try to raise beyond your registration's permitted scope.

The IFSCA (Fund Management) Regulations, 2025 recognise three categories, and they form a genuine ladder - each one unlocking a wider set of activities in exchange for higher net-worth, governance and staffing thresholds.

Authorised FME - the entry point

This is the lightest-touch category, and it exists for a reason: it lets a first-time sponsor get into the market without clearing the same bar as an established institutional manager. An Authorised FME can manage Venture Capital Schemes and act as investment manager for Family Investment Funds. That is it - but for a large share of first-time GIFT City entrants, particularly early-stage venture sponsors and single-family-office structures, that is exactly the scope they need.

Net-worth and governance requirements are correspondingly lower, which makes this the natural starting point for a sponsor testing GIFT City before committing to a larger institutional build-out.

Registered FME (Non-Retail) - the workhorse

Step up one level and you can manage Venture Capital Schemes, Restricted Schemes (GIFT City's equivalent of India's domestic Category I/II/III AIFs), Investment Trusts (the REIT/InvIT equivalent structure), and Portfolio Management Services - all for non-retail, sophisticated investors.

This is where most serious GIFT City fund activity actually lives. Private equity, credit, hybrid and hedge-style strategies targeting global institutional and high-net-worth capital are almost always run out of a Registered FME (Non-Retail), because it is the category that matches the scheme architecture most closely mirroring what international allocators already recognise from onshore AIF regimes elsewhere.

The trade-off is a materially higher net-worth requirement and a stronger key-managerial personnel (KMP) bench than an Authorised FME needs.

Registered FME (Retail) - the top tier

This is the most heavily regulated category, and for good reason: it is the only one permitted to launch Retail Schemes and Exchange Traded Funds - products that can be sold to retail investors, not just sophisticated ones. Everything a Registered FME (Non-Retail) can do, a Registered FME (Retail) can also do, on top of the retail-facing activity.

The bar is correspondingly higher. Registration requires a demonstrated "sound track record" - and a 2025 refinement now lets a group subsidiary's track record count toward that test, which is a meaningful easing for larger financial groups setting up a GIFT City arm rather than a genuinely new manager. KMP strength requirements are the highest of the three categories, though a useful flexibility exists here too: a Registered FME (Retail) can wait to appoint its third KMP until it is actually about to launch a retail product, rather than staffing up before it has proven the strategy.

How to actually choose

The honest answer is: start with what you are raising, not what you aspire to raise. A sponsor planning a single venture fund with a small number of institutional LPs has no reason to clear the Registered FME (Retail) bar - the Authorised FME category will get that fund launched faster and more cheaply. A sponsor planning a multi-strategy platform that will eventually want a retail-distributed product should build toward Registered FME (Retail) from the outset, since re-registering upward later is a real transaction in its own right, not a formality.

The takeaway

The FME category is not a formality to tick off before you get to the real work of drafting your placement memorandum - it is the decision that determines what schemes you can even launch. Map your fundraising ambition honestly against the three categories before you file, because moving up the ladder later costs more time and money than getting the starting category right.