GIFT IFSC FME or SEBI AIF? A side-by-side guide for first-time fund sponsors

If you are planning your first fund, one of the first questions is where to set it up: as a scheme of a Fund Management Entity (FME) in GIFT IFSC, regulated by IFSCA, or as an Alternative Investment Fund in India, regulated by SEBI. This guide compares the rules most sponsors look at first. It does not cover tax, which needs separate advice.

Who registers

In GIFT IFSC, the manager registers as an FME with IFSCA, in one of three categories, and then launches schemes (Regs 3, 3(4) of the IFSCA (Fund Management) Regulations, 2025). Under SEBI, the fund itself registers as an AIF in Category I, II or III (Reg 3 of the SEBI AIF Regulations).

Minimum ticket per investor

• GIFT IFSC venture capital scheme: USD 250,000, or USD 60,000 for the FME's employees and directors; accredited investors may also invest (Reg 20).
• GIFT IFSC restricted scheme: USD 150,000, or USD 40,000 for insiders; no minimum for accredited investors (Reg 32).
• SEBI AIF: ₹1 crore, or ₹25 lakh for employees or directors; no minimum for accredited investors (Reg 10(c)).

How many investors

A GIFT IFSC venture capital scheme can have up to 50 investors and a restricted scheme up to 1,000. A SEBI AIF scheme can have up to 1,000, with accredited investors not counted.

Minimum size

A GIFT IFSC venture capital scheme needs a corpus of at least USD 3 million and at most USD 200 million (Reg 23). A SEBI AIF scheme needs at least ₹20 crore, or ₹5 crore for a social impact fund (Reg 10(b)).

The manager's own money in the fund

For a GIFT IFSC venture capital scheme, the FME or its associate contributes the lower of 2.5% of the corpus or USD 750,000, capped at 10% of the corpus (Reg 28, as amended from 10 September 2026). For a SEBI AIF, the Manager or Sponsor keeps a continuing interest of the lower of 2.5% of corpus or ₹5 crore, or for Category III the lower of 5% or ₹10 crore (Reg 10(d)).

Example. A USD 20 million GIFT IFSC VC scheme: 2.5% is USD 500,000, lower than USD 750,000, so the FME contributes USD 500,000. A ₹100 crore Category II AIF: 2.5% is ₹2.5 crore, lower than ₹5 crore, so the continuing interest is ₹2.5 crore.

How a scheme launches

GIFT IFSC venture capital and restricted schemes use the green channel: they can launch as soon as IFSCA takes the placement memorandum on record. A SEBI AIF files its placement memorandum through a merchant banker at least ten working days before launch, with the scheme fee from its second scheme onwards.

Key takeaways

• Start from your investors: their currency, ticket sizes and number usually point to one regime.
• Model the manager's contribution in both regimes before you decide.
• The FundReg Decision tool compares SEBI and IFSC set-ups step by step, and the Setup Navigators test each route.