Alternative Investment Framework for Mobilising Private Capital

THE RISE OF ALTERNATIVE ASSET CLASS

The Alternative Investment Fund (AIF) industry in India has emerged as a dynamic and fast-evolving segment of the financial market, playing an increasingly critical role in channelling long-term capital into high-growth sectors and alternative asset classes. Over the past few years, this segment has gained prominence as a preferred investment vehicle for institutional and high-net-worth investors seeking diversification beyond traditional avenues. Backed by regulatory support, rising investor appetite, and growing sophistication in fund management practices, it has witnessed consistent growth in both participation and capital deployment.

In line with this trend, the AIF industry continued its strong upward trajectory with number of AIF’s sharply rising to 1,526 by March 31, 2025, from 1,283 in the previous year, reflecting a notable expansion in fund registration across all categories. Category III AIFs led this growth with a 33% rise, followed by Category II at 17% and Category I at 11%. On the capital front, the total commitments raised across all categories increased by 18.9% to r13,49,051 crore, up from r11,34,900 crore a year earlier. This was accompanied by a 24.7% increase in funds raised and a substantial 32.2% rise in investments made during the year, highlighting the growing deployment capacity of AIFs.