Open to NRIs and OCIs in the UAE; whether a manager accepts you is that firm's own policy. Minimum ₹1 crore. Category I and II AIFs are close-ended with a minimum tenure of three years; an individual fund may run longer.
What it is
An AIF is a privately pooled fund. Category I invests in start-ups, infrastructure or social ventures; Category II in private equity, private debt and real estate; Category III in listed markets with hedge-style strategies and leverage. Category I and II funds call your commitment in tranches over a few years and return money as investments are sold. The minimum is ₹1 crore by SEBI's rule.
Who it's for
Someone with ₹1 crore that can be locked away, who already holds a diversified base in funds or PMS, and who wants exposure to private companies, private credit or strategies a mutual fund can't run. An accredited investor is exempt from the ₹1 crore AIF minimum, and some managers set a lower floor for them.
What it needs from abroad
An NRE or NRO account, PAN, a FATCA/CRS declaration, and the fund's contribution agreement and private placement memorandum, signed and attested. US and Canada residents are taken by some managers and not others. Onboarding is slower than for a fund: expect several weeks.
Risks and catches
You can't exit when you want; the fund returns money on its own schedule. Valuations are quarterly or rarer, and some investments fail outright. Capital calls arrive on the fund's timetable and missing one has penalties. Fees include management and carried interest. Manager quality matters more than in any other product here.
Tax, for an NRI
Category I and II funds are pass-through: the income keeps its character (dividend, interest, capital gain) and is taxed in your hands in India, with tax deducted at source by the fund. Category III funds are outside that pass-through and are taxed at the fund level. Your country of residence may tax the income too; where India has a tax treaty with it, relief may apply. These rules are set by the Income-tax Act, 2025.
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