Third-party fund management services

What the framework does

Part D was inserted by the IFSCA (Fund Management) (Amendment) Regulations, 2025 with effect from 30 July 2025. It lets a Registered FME offer "third-party fund management services": it sets up and manages schemes on behalf of a third-party fund manager. That is an entity registered or regulated for fund management, portfolio management, investment advice or similar activity by the financial sector regulator of its country of incorporation.

The model suits a manager that wants an IFSC-domiciled fund for its strategy without first building its own FME. It also suits an IFSC FME that wants to act as a platform for several such managers.

Part D does not apply where the FME's own parent or associate provides fund management support or advice to it (regulation 107M). A group that supports its own IFSC entity, or a foreign manager operating through its own IFSC branch, is outside the framework.

Authorisation and conditions for the host FME

• Authorisation from IFSCA under Part D, in addition to the FME's registration (regulation 107C).
• Legal form. A company or LLP in the IFSC whose constitution permits third-party fund management (regulation 107D). The branch form is not listed.
• Net worth. An additional USD 500,000, over and above the FME's own requirement and any capital for other activities (regulation 107F).
• People. A dedicated principal officer for each third-party scheme, responsible for its fund management, risk management and compliance. A Non-Retail FME's compliance officer may also cover the third-party schemes. A Retail FME must keep a separate compliance officer for its retail schemes. Third-party AUM counts towards the USD 1 billion threshold for an additional KMP.
• Fees. IFSCA's circular of 8 September 2025 sets an application fee of USD 2,500, an authorisation fee of USD 7,500, and an annual recurring fee of USD 2,000 for each third-party manager served. These are in addition to the FME's own fees. See fees.

Which schemes, and how they are filed

Only restricted schemes may be managed under the arrangement, each with a corpus of no more than USD 50 million (regulation 107G). The third party is treated as an associate of the FME for the rules on investing in associates, dealing with associates and the FME's own contribution. The placement memorandum must disclose, under a separate prominent heading:

• the third party and the persons who run it;
• how responsibilities are split between the FME and the third party; and
• the conflicts of interest and how they are managed.

Under IFSCA's circular of 16 January 2026, scheme applications are filed on SWIT in the usual scheme format. They are accompanied by:

1. the third party's legal name, registered office and home-regulator registration;
2. a look-through chart of its ultimate beneficial owners;
3. profiles of its board or designated partners and key personnel;
4. its assets under management and track record in similar strategies;
5. a declaration of compliance with regulations 107H and 107K;
6. the agreement between the FME and the third party;
7. an outline of deal execution, conflicts and the third party's remuneration policy; and
8. details of any KMP appointment or change.

Liability stays with the host

The schemes are the FME's own schemes. The FME remains liable for all obligations under the arrangement, whatever indemnity it has, and answers for the third party's acts and omissions (regulations 107C(4) and 107K). In practice the FME must:

• check that the third party is eligible: incorporated in India, the IFSC or a foreign jurisdiction, adequately resourced, experienced and fit and proper;
• monitor the third party, give it instructions where needed and report on it to the scheme's fiduciaries;
• keep the right to terminate at any time in investors' interests or on IFSCA's direction, and take an indemnity from the third party;
• maintain a risk framework for these arrangements, segregate each scheme's money and operations, extend its complaints process to these investors, and audit compliance periodically.

From 1 December 2026, the FME's website must list each scheme it manages for a manager not based in the IFSC. See fund governance.

Aligning the home jurisdiction

The third party's own regulator may treat the arrangement as delegation, distribution or management of a foreign fund. Check that its licence permits it, and whether marketing the IFSC scheme in its own market needs local registration. The mandate, any sub-advisory role and the flow of fees should be documented consistently on both sides, with transfer pricing in mind where the parties are related. See transfer pricing.