Obtaining an AIF licence in India requires more than creating an investment vehicle and submitting an application to SEBI. The proposed Alternative Investment Fund, its legal structure, sponsor, manager, key investment team and investment strategy must fit within the eligibility framework under the SEBI (Alternative Investment Funds) Regulations, 2012. For foreign businesses, this assessment also needs to be considered alongside the proposed ownership structure, foreign investment rules and the way the fund will operate in India.  

The expression “AIF licence” is commonly used in the market, but SEBI’s regulatory terminology is registration. An applicant seeks a certificate of registration from SEBI, and the registration framework determines whether the proposed AIF can operate as a regulated fund. Eligibility should therefore be established before the application is prepared, rather than treating registration as a formality after incorporation.

What Is an AIF Licence in India? 

An Alternative Investment Fund is a privately pooled investment vehicle established or incorporated in India as a trust, company, limited liability partnership or body corporate. It collects funds from investors, including Indian or foreign investors, according to a defined investment policy and is regulated by SEBI under the AIF Regulations. The framework specifically distinguishes AIFs from vehicles already regulated under other SEBI fund-management regulations.  

An AIF licence therefore means, in practical terms, SEBI registration as an Alternative Investment Fund. A fund cannot act as an AIF without obtaining the required certificate of registration. The category selected at registration also matters because Category I, Category II and Category III AIFs have different investment and operating conditions.  

Who Can Apply for an AIF Licence? 

The proposed AIF itself must be established or incorporated in India in one of the structures recognised by the regulations: 

• Trust  
• Company  
• Limited Liability Partnership  
• Body corporate  

The structure must also have the appropriate constitutional documents and must be capable of carrying out activities consistent with the proposed AIF category. For example, a trust would need a properly registered trust deed, while an LLP must have its partnership documentation duly registered.  

This distinction is particularly relevant for an overseas fund manager or foreign promoter. A foreign company cannot simply treat its existing overseas investment vehicle as an Indian AIF. The AIF definition itself refers to a fund established or incorporated in India. A foreign group may, however, need to assess how its overseas entities can participate in the proposed Indian structure as sponsor, manager, investor or related entity, subject to the applicable regulatory framework. 

The legal form is only the starting point. SEBI also assesses the applicant, sponsor and manager, together with the proposed investment strategy, infrastructure, manpower and key investment team. 

What Are the AIF Eligibility Criteria? 

The AIF eligibility criteria operate across several parts of the proposed fund structure. Meeting one requirement does not compensate for a deficiency elsewhere. 

Applicant 

The applicant must have an eligible legal form, appropriate constitutional documents and an investment objective that is consistent with the proposed AIF category. It must also provide SEBI with the information required under the regulations and application framework, including details of its structure, proposed strategy and supporting documentation.  

Sponsor 

The sponsor is the person or entity that establishes or sets up the AIF. The sponsor must satisfy the applicable fit and proper requirements, and its regulatory history and financial position form part of the information examined during registration. SEBI’s application framework also requires financial information to demonstrate the capacity of the sponsor or manager to maintain the required continuing interest.  

Manager 

The manager is the person or entity appointed by the AIF to manage its investments. The manager may also be the sponsor. Its suitability is assessed not merely by its name or incorporation status, but by its ability to manage the proposed fund, including the availability of appropriate infrastructure and manpower.  

Key investment team 

The key investment team is central to the eligibility assessment. The regulations require adequate experience within the team, including at least one key personnel with at least five years of relevant experience in managing or advising pools of capital, fund, asset, wealth or portfolio management, or dealing in securities or other financial assets.  

There is also a professional qualification requirement. At least one key personnel must have a qualifying professional background in areas such as finance, accountancy, business management, commerce, economics, capital markets or banking, or a CFA charter, subject to the regulatory requirements. The experience and qualification requirements may be satisfied by the same individual.  

In addition, SEBI has specified the NISM-Series-XIX-C: Alternative Investment Fund Managers Certification requirement for at least one key personnel among the associated persons functioning in the manager’s key investment team.

Investment strategy and governance 

The proposed investment strategy must be clearly defined. SEBI’s application framework requires information on the investment objective, targeted investors, proposed fund size, investment style or strategy and proposed term of the fund. The placement memorandum must also describe the fund and its investment strategy.  

The applicant, sponsor and manager must also satisfy the applicable fit and proper requirements. SEBI’s framework can consider regulatory actions, securities law violations and other matters affecting the suitability of the entities and relevant persons.  

Do AIF Eligibility Requirements Differ by Category? 

The basic applicant and personnel requirements apply across the AIF framework, but the proposed strategy and operating model must fit the selected category. 

Requirement	Category I	Category II	Category III
Regulatory character	Invests in sectors or activities considered socially or economically desirable under the regulations	Does not fall within Category I or III and generally does not undertake leverage or borrowing other than permitted operational requirements	May employ diverse or complex trading strategies and leverage
Typical strategy consideration	Venture capital, infrastructure, SME, social impact and other specified areas	Private equity, debt and other strategies falling within the residual category	Trading-oriented or more complex strategies
Leverage	Generally restricted under the category framework	Generally restricted, subject to permitted borrowing	May employ leverage subject to the regulations
Structure	Category-specific requirements apply	Category-specific requirements apply	Additional prudential and operational requirements apply

The category should therefore be selected from the proposed investment strategy, not simply from the preferred fund structure. Category III, for example, is designed for AIFs employing diverse or complex trading strategies and may use leverage, making its operating and compliance requirements materially different from those of Category I or II.  

What Are the Minimum Corpus and Investor Requirements for an AIF?

For a regular AIF scheme, the minimum corpus is INR 20 crore. The general minimum investment by an investor is INR 1 crore, although the regulations contain specific exceptions and different frameworks for certain categories of investors and schemes. A scheme may not ordinarily have more than 1,000 investors.  

The manager or sponsor must also maintain a continuing interest in the AIF. For Category I and Category II AIFs, this is at least 2.5% of the corpus or INR 5 crore, whichever is lower. For Category III AIFs, the requirement is 5% of the corpus or INR 10 crore, whichever is lower. The interest must be maintained through investment and cannot be satisfied by simply waiving management fees.  

The framework also contains specialised provisions. Social Impact Funds have a lower minimum corpus of INR 5 crore, while Angel Funds operate under a separate framework. Since September 2025, newly registered Angel Funds are required to raise funds only from Accredited Investors, with transitional arrangements for older Angel Funds extending until September 8, 2026.  

For Large Value Funds for Accredited Investors, the current framework defines the LVF by reference to Accredited Investors investing at least INR 25 crore each. AI-only schemes are also subject to a separate regulatory framework. 

What Documents Demonstrate AIF Eligibility? 

The documents are not simply paperwork attached to the application. They allow SEBI to assess whether the proposed structure satisfies the eligibility framework. 

The application generally needs to establish: 

• The legal identity and constitutional structure of the applicant  
• Details of the sponsor and manager  
• Ownership and control information  
• Financial information demonstrating the ability to meet applicable obligations  
• Regulatory and disciplinary history  
• Profiles and qualifications of the key investment team  
• Proposed investment strategy  
• Infrastructure and manpower arrangements  
• Draft placement memorandum  
• Other declarations and supporting information required by SEBI  

SEBI’s application guidance specifically calls for information concerning the applicant, sponsor, investment manager, trustee where relevant, key investment team, financial capacity and regulatory history.  

How Do You Apply for an AIF Licence in India? 

Once the eligibility position has been established, the formal application can be prepared. SEBI’s current application guidance directs applicants to the SI Portal, where an application for AIF registration is initiated and the required information and supporting documents are submitted. The prescribed application fee is currently INR 1,00,000 plus 18% GST.  

The practical sequence is: 

1. Define the investment strategy and proposed category.  
2. Determine the appropriate legal structure.  
3. Establish the applicant structure where required.  
4. Finalise the sponsor and manager arrangements.  
5. Confirm the key investment team’s experience, qualifications and certification.  
6. Prepare constitutional and fund documents.  
7. Prepare the placement memorandum.  
8. Submit the application and supporting information through the prescribed SEBI process.  
9. Respond to any questions or requests for clarification from SEBI.  
10. Pay the applicable registration fee after approval, as required.
11. Obtain the certificate of registration.  

There is no basis for treating the process as automatic once the basic eligibility conditions appear to be satisfied. SEBI evaluates the application against the applicable regulatory requirements and may seek further information or clarification.  

How Much Does an AIF Licence Cost?

The cost of an AIF licence has both regulatory and structural components. The prescribed application fee is INR 1,00,000 plus applicable GST. The registration fee under the current fee schedule is INR 5,00,000 for Category I, INR 10,00,000 for Category II and INR 15,00,000 for Category III, excluding Angel Fund provisions.  

The overall cost, however, extends beyond SEBI fees. Depending on the proposed structure, an applicant may incur costs for entity formation, legal and fund documentation, governance arrangements, trustee services where applicable, audit, custody, valuation, fund administration, compliance and cross-border structuring. 

The appropriate cost assessment should therefore be made after the AIF category, legal structure, sponsor and manager arrangements and investment strategy have been determined. 

What Should Foreign Businesses Consider Before Applying for an AIF Licence? 

A foreign business should first determine which role it intends to play in the Indian fund structure. A foreign investor, foreign sponsor and foreign manager are not interchangeable concepts, and the regulatory consequences can differ depending on ownership, control and the flow of capital. 

The AIF itself must be established or incorporated in India, while foreign participation may create additional FEMA and RBI considerations. Under the foreign investment framework, an Investment Vehicle can receive investment from a person resident outside India subject to the applicable conditions, and downstream investment treatment can depend on whether the sponsor or manager is Indian owned and controlled.  

For a foreign fund manager or promoter, the analysis should therefore cover: 

• The Indian AIF vehicle and its legal form  
• Ownership and control of the sponsor and manager  
• Beneficial ownership  
• Source and movement of foreign capital  
• Applicable FEMA and RBI requirements  
• Investor eligibility  
• The fund’s proposed investment strategy  
• Cross-border reporting and documentation  
• Tax structuring, where relevant  
• Any separate regulatory approval that may be required  

SEBI registration and permission to make or receive a particular foreign investment are related but distinct regulatory questions. Establishing one does not automatically establish compliance with the other.

Does Meeting the Eligibility Criteria Guarantee SEBI Registration? 

No. Eligibility is the foundation of the application, not a guarantee of approval. 

SEBI considers the requirements specified under the AIF Regulations and the information submitted by the applicant. The regulatory framework also permits SEBI to reject an application where it is not satisfied that the certificate should be granted, subject to the prescribed process.  

This is why the structure should be settled before filing. A change in the sponsor, manager, investment strategy or ownership arrangements can affect information that has already been provided to SEBI.

Conclusion 

An AIF licence is not obtained simply by creating a trust, company, LLP or other investment vehicle. The proposed AIF must satisfy the applicable eligibility requirements, while the sponsor, manager and key investment team must also meet regulatory expectations around suitability, experience, qualifications, infrastructure and governance. The proposed strategy, category, corpus, investor structure and documentation must fit together before the application reaches SEBI. 

For a foreign business, the analysis needs one additional layer. The proposed Indian AIF, foreign sponsor or manager, investors, ownership and cross-border fund flows need to be considered together rather than in isolation. Assessing the current AIF license requirements and related FEMA considerations before filing can help establish whether the proposed fund structure is capable of meeting the applicable regulatory requirements. 

Going Beyond AIF Registration? Download the AIF Compliance & Regulatory Whitepaper. Explore key AIF thresholds, compliance obligations, taxation, reporting requirements and SEBI enforcement trends. 

Frequently Asked Questions

What is an AIF licence in India?

An AIF licence is the commonly used term for SEBI registration as an Alternative Investment Fund. The formal regulatory terminology is a certificate of registration issued under the SEBI (Alternative Investment Funds) Regulations, 2012.

Who can apply for AIF registration?

An AIF must be established or incorporated in India as a trust, company, LLP or body corporate. The proposed applicant must also satisfy requirements relating to its sponsor, manager, investment team, strategy, infrastructure and regulatory suitability.

Can a foreign company set up or sponsor an AIF in India?

A foreign company cannot simply use its overseas fund vehicle as the Indian AIF because the AIF itself must be established or incorporated in India. Foreign participation in the sponsor, manager or investor structure requires separate assessment of applicable SEBI, FEMA and RBI requirements.

What are the AIF eligibility criteria?

The key requirements cover the applicant’s legal structure, sponsor and manager suitability, key investment team experience and qualifications, infrastructure, investment strategy, governance and fund-level requirements. The specific requirements can also vary according to the AIF category and scheme structure.

What is the minimum corpus required for an AIF?

A regular AIF scheme generally requires a minimum corpus of INR 20 crore. Certain specialised structures have different requirements, including a INR 5 crore minimum corpus for a Social Impact Fund.

How long does AIF registration take?

SEBI’s current application guidance does not establish a single guaranteed approval period. The time required depends on the completeness of the application, supporting documentation and any clarifications or additional information sought during SEBI’s review.

Is SEBI registration required before an AIF can begin operations?

Yes. An entity or person cannot act as an AIF without obtaining the required certificate of registration from SEBI, subject to the limited provisions and transitional arrangements contained in the regulations.