What Actually Changed Under the 2025 Fund Management Regulations (and Three Times Since)

GIFT City's fund-management framework has not sat still. In February 2025, the IFSCA (Fund Management) Regulations, 2025 replaced the original 2022 Regulations outright - not a light amendment, a full repeal-and-replace. Since then, IFSCA has issued a further amendment in January 2026, three separate circulars in April 2026, and another round of relaxations in May 2026. If your understanding of the framework is more than a few months old, parts of it are probably wrong.

The corpus bar came down

The most consequential change for smaller sponsors: the minimum corpus for Venture Capital Schemes, Restricted Schemes and Retail Schemes dropped from USD 5 million to USD 3 million. That is not a cosmetic adjustment - it meaningfully lowers the fundraising threshold a manager needs to clear before commencing investment activity, and it puts Retail Schemes on the same footing as non-retail structures for the first time.

Open-ended restricted and retail schemes got an additional concession: they can begin investing once they have raised USD 1 million, provided they reach the full USD 3 million minimum within twelve months.

You get twice as long to raise it

The validity period for a scheme's placement memorandum or offer document - the window within which a manager has to hit minimum corpus before needing to seek an extension - was extended from six months to twelve months. Combined with the lower corpus threshold, this is a genuine and material easing of fundraising pressure for managers who previously found themselves racing an artificially short clock.

Sponsors can now put in real money

Previously, a fund management entity and its associates were capped at contributing 10% of a scheme's corpus - a limit designed to keep third-party investor protection front and centre. Under the 2025 Regulations, that cap can now go as high as 100%, provided the FME and its associates are non-resident, have no Indian-resident ultimate beneficial owner, and no more than 33% of the scheme's corpus goes into any single investee company and its associates. This is a significant structuring lever for proprietary-capital and sponsor-heavy vehicles that do not fit the traditional third-party-fund mould.

Related-party transactions got a real guardrail

Schemes can no longer buy or sell securities from associates, other schemes of the same FME or its associates, or a "major investor" (one who has committed at least half the scheme's corpus) - unless 75% of investors, by value, approve. And tellingly, the major investor is excluded from voting on its own transaction. This closes a gap that sophisticated allocators had started asking pointed questions about.

Then came the circulars

Rather than issuing another omnibus amendment, IFSCA shifted approach in 2026: three separate circulars in the first half of April alone. Together they introduced a mandatory professional certification course for key managerial personnel and other employees discharging core fund-management functions (administered through the Institute of Company Secretaries), tightened the KMP appointment process, and sharpened governance expectations for scheme fiduciaries.

That shift - from occasional big-bang amendments to frequent, targeted circulars - is itself worth noting. It suggests a regulator moving into a more hands-on supervisory posture as the ecosystem matures, rather than one still building out the basic rulebook.

The takeaway

If you are advising a client on GIFT City fund structuring, "check the 2022 Regulations" is now actively wrong advice, and "check the 2025 Regulations" is only half right - you also need the January 2026 amendment and the April 2026 circulars in view. This is a framework that rewards staying current, not one where a single read of the principal regulations will serve you for the life of a mandate.