There are two ways foreign capital sets up in GIFT City, and they are governed by the same 2025 rulebook but built for different purposes. A fund that takes outside investors runs through a Fund Management Entity. A single family that wants its own platform runs a Family Investment Fund. Both are more accessible than before, and in both the work that earns the benefit is the entity choice, the substance and the India downstream, not the registration itself.
At a glance
- a fund runs through an FME in one of three categories, each with its own net-worth requirement;
- most foreign managers use a Non-Retail FME (USD 500,000 net worth) running a Restricted Scheme;
- the 2025 reforms cut the non-retail scheme corpus to USD 3 million and doubled the PPM window to 12 months;
- a single family can run a self-managed Family Investment Fund with a USD 10 million corpus and a light-touch regime;
- both routes require a real office, a principal officer and decision-making presence in GIFT City.
Route one: a fund through an FME
Every fund in GIFT City runs through an FME, the regulated manager. You register the FME in one of three categories, and the choice drives the net worth you must hold, the investors you can take and the compliance load.
Most foreign managers register a Non-Retail FME and run a Restricted Scheme, which is built for sophisticated and institutional capital and carries the lighter disclosure regime. As of 2025 roughly 194 FMEs manage over 310 schemes in the centre. An FME that also offers third-party fund management, hosting other managers' schemes, holds an additional USD 500,000 of net worth on top of its category minimum.
Key personnel and substance
An FME is not a shell. It appoints a principal officer, accountable for fund management, risk and compliance, along with compliance and other key managerial personnel whose number scales with the assets and the type of scheme. These are real roles based in GIFT City, and they are the substance that supports the tax and treaty position. Underbuilding them is the most common reason a structure is later challenged.
Corpus, timeline and the platform-play option
The 2025 reforms made a first fund materially cheaper. The minimum corpus for a non-retail scheme fell from USD 5 million to USD 3 million, and the placement-memorandum validity doubled to twelve months, so there is longer to raise before re-filing. A platform-play model now lets an established Registered FME host schemes for third-party managers, which is the fastest route to market for a first-time manager who does not want to stand up a full FME immediately.
The approval path, in sequence
In outline, the steps run: register the FME with the IFSCA in the chosen category and meet the net-worth requirement; set up the IFSC unit, including the office and the SEZ unit approval; appoint the principal officer and key personnel; and then file the scheme's placement memorandum and launch within its validity window. Each step has its own clock, and sequencing them correctly is much of the practical work.
Route two: a single-family Family Investment Fund
A family that wants a regulated, dollar-denominated platform of its own, without relocating, can run a Family Investment Fund. It is a self-managed fund that pools the capital of one family and registers as an Authorised FME. A single family here means the lineal descendants of a common ancestor, together with their spouses and children, and the fund can hold almost any global asset class, open-ended or closed-ended.
The FIF is built to be light-touch. It needs a corpus of USD 10 million within three years of registration, it can be a company, a contributory trust or an LLP, and it is exempt from the net-worth and legal-form requirements that bind other managers. It does, though, require a genuine physical office in GIFT City, with the SEZ unit approval, because that presence is the substance behind the tax and treaty position. IFSCA registered its first foreign family-office FIF under the 2025 rules, so the route is open to non-Indian families with India or regional interests, and it doubles as a succession and consolidation vehicle for a family that today holds its wealth across several jurisdictions.
Choosing between the two
The dividing line is simple. If the capital comes from one family, the FIF is usually the better fit, lighter and purpose-built. The moment outside families or third-party investors are involved, you are in FME-and-scheme territory, a different registration with its own net-worth and disclosure requirements. Getting this wrong is the most common structuring error, because it is hard to unwind once investors are in.
A worked example
A Singapore-based manager raising capital for an India private-credit strategy would typically register a Registered FME (Non-Retail), hold USD 500,000 of net worth, appoint a principal officer and compliance personnel in GIFT City, and launch a Restricted Scheme with at least the USD 3 million corpus, taking only sophisticated and institutional investors. A Gulf family with operating businesses in India and a global portfolio would instead register an Authorised FME and run a Family Investment Fund, building to the USD 10 million corpus, using the lighter regime and the office in GIFT City as the platform for both the India holdings and the family's wider wealth.
Substance and timeline
Both routes stand or fall on substance. The tax holiday, the investment exemptions and any treaty benefit assume a real, staffed, decision-making presence in GIFT City, with investment decisions genuinely taken there. The corpus, the placement-memorandum window and the SEZ unit approvals all run on clocks, and missing them resets the launch. Build the office, the people and the timeline into the plan from the start, not after registration.
Where this goes wrong
- Wrong FME category or route. A Retail registration for purely institutional money over-burdens you on net worth and compliance; a single-family FIF cannot take outside investors.
- Underbuilt substance. Treating the principal officer, the staff and the office as a formality is the single most common reason a structure is later challenged.
- Mismatched timeline. The corpus, the PPM window and the SEZ approvals each have deadlines that, if missed, restart the process.
- Ignoring the India downstream. How the vehicle holds and exits the India assets, on FEMA, withholding and treaty, decides the net return.
How ATB Corporate helps
We set up the FME or the FIF end to end: the category and net worth, the principal officer and key personnel, the placement memorandum, the IFSCA application, the office and substance, and the choice of vehicle for a family's succession and tax position. We then structure the India-side holdings, FEMA position and tax beneath it, so the platform works in practice and not only on paper.
Talk to ATB about your GIFT City fund or family office →
FAQ
What net worth does an FME need?
Under the 2025 rules, an Authorised FME needs USD 75,000, a Registered FME (Non-Retail) USD 500,000 and a Registered FME (Retail) USD 1,000,000. An FME offering third-party fund management holds an additional USD 500,000.
What does it cost to start a fund in GIFT City?
Beyond the FME net worth, a non-retail scheme needs a USD 3 million corpus, reduced from USD 5 million in 2025, alongside the office, key personnel and running costs. The platform-play model can lower the entry cost for a first fund by hosting it on an established FME.
What is the minimum for a family office?
A single-family Family Investment Fund needs a corpus of USD 10 million within three years of registration, plus a genuine office in GIFT City. It is exempt from the net-worth and legal-form requirements that apply to other managers.
Can a foreign manager or family use these routes?
Yes. Both the FME and FIF routes are open to non-residents, and IFSCA has registered a foreign family-office fund under the 2025 rules; the benefit is conditional on building real substance in the centre.
FME or FIF, which do we need?
If the capital is from one family, the FIF is usually right. If outside families or third-party investors are involved, you need an FME running a scheme. The two are not interchangeable once investors have come in.
Key references
IFSCA (Fund Management) Regulations 2025, including the FME categories and net-worth requirements (Authorised FME USD 75,000; Registered Non-Retail USD 500,000; Registered Retail USD 1,000,000), Restricted Schemes, minimum corpus, placement-memorandum validity, Principal Officer and KMP requirements, the Third-Party Fund Management framework, and the Family Investment Fund provisions.
This article is general information and not tax or legal advice. Laws and IFSCA rules change, and positions should be confirmed for your specific circumstances before being relied upon.