Strengthening the Investment Ecosystem at India’s IFSC

OVERVIEW

• GIFT IFSC has witnessed remarkable growth in its fund management ecosystem, with over 160 Fund Management Entities (FMEs) and more than 250 schemes currently registered.
• This momentum began with the introduction of the Fund Management Regulations in April 2022 and has been further accelerated by the recently notified Fund Management Regulations, 2025.
• These regulations have significantly enhanced the ease of doing business, creating a favorable environment for innovation.
• This dynamic and evolving landscape has now laid the foundation for introducing more flexible investment structures, such as co-investment models.

Co-Investment via Special Purpose Vehicles

• Co-investment refers to the mechanism that allows existing venture capital or restricted schemes to invest alongside their main scheme in specific opportunities.
• This is facilitated through a Special Purpose Vehicle (SPV), also known as a Co-Investment Vehicle (CIV), collectively referred to as a “Special Scheme.”
• The Fund Management Regulations, 2025, expressly permit such co-investments, which can be undertaken with or without leverage.
• This structure is designed to enable faster execution of deals while ensuring adherence to regulatory standards and maintaining transparency in investment operations.

Key Features of the New Framework

• The new framework introduced by IFSCA empowers existing schemes to swiftly set up Special Schemes for co-investment without the need for prior approval.
• Fund managers can proceed with the investment first and are required to file the term sheet with IFSCA within 45 days of making the investment.
• This streamlined process significantly accelerates investment execution, minimizes procedural delays, and enhances the overall agility of fund operations.
• By simplifying co-investment compliance, the framework strengthens the global competitiveness of India’s fund management industry at GIFT IFSC.

Strategic Impact & Future Outlook

• The introduction of this co-investment framework marks a significant step in enhancing operational flexibility for fund managers at GIFT IFSC.
• By enabling quicker and more efficient investment execution, it encourages greater participation from venture capital and private equity players.
• This positions GIFT IFSC as a global hub for innovation in fund structuring and cross-border investment.
• Through this initiative, IFSCA reaffirms its commitment to promoting ease of doing business, fostering innovation within a regulated environment, and building a regulatory framework that is both robust and agile to meet evolving market needs.

CONCLUSION

• The new co-investment framework marks a significant step towards simplifying fund operations and accelerating deal-making at GIFT IFSC.
• By enabling faster investments through Special Schemes and minimizing regulatory delays, IFSCA continues to reinforce GIFT City’s position as a global hub for innovative and agile fund management.