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Setting Up an AIF in GIFT City-Tax Benefits, Structure and Complete Guide for Global Investors

Setting Up an AIF in GIFT City-Tax Benefits, Structure and Complete Guide for Global Investors

19 Oct, 2026

Gift City has become one of the best options for AIFs & FMEs in India. Gift city is providing access to global markets like Mauritius & Singapore with greater flexibility & transparency for investing in foreign markets.

AIFs is basically a pool of investment vehicles privately owned to invest according to requirements of investor

Meaning of Fund Management Entities (FME)

At the core of every fund lies a Fund Management Entity (FME) which manages the fund, licensed by International Financial Services Centre (IFSCA) in Gift City to manage the funds within the Gift City.

A FME can be setup as Company, LLP or Branch of foreign Company.

There are 3 categories under FMEs to undertake various funds management activities under a single registration:

AIFs are categorized into 3 Categories Category 1, Category II & Category III based on investment strategy & risk profile

Comparison of Categories of AIFs

Step by Step guide to setup AIF in GIFT City

1. Select the Category of AIF- The sponsor of the fund needs to determine the category of AIF in which the investors are looking to invest. As discussed above, there are 3 categories of AIF out of which it can be chosen Category 1, Category II & Category.

2. Select the FME type- Next the sponsor needs to select the Fund management entity (FME) aligned with investor’s target base. As discussed above, there are 3 types of FME that can be chosen- Registered FME-Retail, Registered FME- Non Retail, Authorized FME.

3. Identity the physical office space – The sponsor needs to select the suitable office premises within GIFT City IFSC. Space must comply with IFSC guidelines, regulatory approvals

4. Incorporate FME- Now, proceed with setting up of FME. It can be setup as Company or LLP. The entity becomes an applicant for SEZ approval, IFSC registration

5. Obtain provisional letter of allotment- After identifying the office space, entity can apply to GIFT City developer for provisional letter of allotment.

6. File application for SEZ approval- Now the entity can apply for SEZ approval Development Commissioner to obtain SEZ unit status.

7. Apply for IFSC registration- Parallely, Entity can apply for AIF registration with IFSCA. Disclosures need to be made on investment strategy, target investor base, Sponsor & management background.

Conclusion- By following the above steps, Entity shall be able to register itself under SEZ & IFSCA.

CA Vidhu Duggal

www.vidhuduggalandco.com | vidhu@vidhuduggalandco.com | Profile

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