How TPFM Is Making Fund Management Entry Easier at GIFT IFSC

Traditionally, fund managers aiming to establish a presence in new financial hubs faced the challenge of setting up a fully regulated fund-management business before demonstrating the commercial viability of their funds. This was the case at the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) as well. Fund managers had to navigate the complexities of creating a local legal and regulatory framework, hiring key personnel, and building the operational systems necessary to run a regulated fund entity. For emerging or smaller managers, these initial commitments often proved difficult to justify without first securing substantial assets under management.

The introduction of Third-Party Fund Management Services (TPFM) under the International Financial Services Centres Authority's (IFSCA) 2025 Fund Management Regulations has altered this landscape. This framework allows an already registered Fund Management Entity (FME) within GIFT IFSC to launch and manage eligible schemes on behalf of external fund managers. Essentially, the host FME supplies the regulated infrastructure, while the third-party manager contributes the investment strategy, expertise, and fund proposition. This approach is often referred to as a "platform play."

Before TPFM, entering a new jurisdiction involved significant upfront costs that had to be absorbed before any revenue was generated. Managers needed to develop the regulatory structure, operational capacity, compliance processes, and technology infrastructure to support investors and manage the fund. These platform-level expenses are tied to establishing the regulated business environment rather than the investment strategy itself. Large institutional managers typically handle these costs more easily, but for boutique or emerging managers, these expenses can be a prohibitive barrier to entry. The challenge was not the lack of commercial potential in the investment strategy but the necessity of committing resources before confirming investor interest.

TPFM changes this by enabling managers to utilize an existing FME’s regulated platform instead of building one from scratch. The host FME provides the governance, compliance, operational setup, and regulatory oversight, while the third-party manager focuses on the investment approach and fundraising. Importantly, the third-party manager remains fully subject to the regulatory requirements through the host FME, which maintains responsibility for the regulated activities conducted via the platform. This distinction clarifies that TPFM is not merely renting a regulatory license but rather sharing a compliant institutional framework under strict oversight.

The economic impact of TPFM is seen in the differentiation between fund capital and platform capital. Fund capital refers to the money raised for the investment vehicle itself, which still must meet regulatory minimum corpus requirements—such as the USD 3 million threshold for restricted schemes. Platform capital, on the other hand, is the investment needed to build and maintain the regulated fund-management infrastructure. While TPFM does not reduce the fund capital needed, it significantly lowers the upfront platform capital requirements for managers entering GIFT IFSC.

This arrangement is particularly beneficial for boutique and emerging managers who might attract several million dollars in capital but cannot justify the cost of a full independent fund-management setup. By partnering with an existing FME, they can test their strategies, develop an investor base, and establish a presence within GIFT IFSC without duplicating the entire infrastructure. This modular approach allows managers to allocate more resources toward portfolio management and fundraising, reducing the financial risk associated with launching new funds.

Overseas fund managers also stand to gain from TPFM. For those interested in India-linked investment strategies or international products, this model provides access to GIFT IFSC’s ecosystem without the burden of establishing a separate regulated entity initially. The advantage lies in lowering the infrastructure commitment required to enter a new financial centre, facilitating international collaboration and market expansion.

It is crucial to understand what TPFM does not do. It does not eliminate the need for a sound investment strategy, sufficient investor capital, compliance with governance and risk management standards, or the regulatory responsibilities held by the host FME. The third-party manager still operates under the IFSCA’s regulatory framework, ensuring investor protection and market integrity.

In summary, TPFM represents a shift toward a lower-infrastructure pathway for fund managers to access GIFT IFSC’s regulated environment. While it does not remove all financial or regulatory obligations, it reduces platform-building expenditure and allows managers to focus on commercial validation. This development could encourage more diverse fund strategies and increase the participation of emerging managers in the dynamic GIFT IFSC market.