The Indian financial ecosystem is undergoing a quiet yet impactful transformation Alternative Investment Funds (AIFs), operating out of GIFT City, are emerging as indirect capital enablers for India’s micro and small enterprises (MSMEs). As highlighted in a recent report by The Hindu Business Line, this trend is more than just a regulatory breakthrough; it is a strategic shift toward deepening financial inclusion and boosting grassroots economic growth.
AIFs in GIFT City: An Emerging Capital Channel
India’s GIFT City (Gujarat International Finance Tec-City), envisioned as a global financial hub, is increasingly becoming a preferred jurisdiction for Category I and II AIFs thanks to its favorable tax regime, liberalised capital flow norms, and global investor access.
A growing number of AIFs are now mobilising funds from foreign and domestic investors to invest in credit structures, trade receivables, and supply chain finance platforms. These vehicles, in turn, are channelling liquidity into NBFCs, fintechs, and credit intermediaries that lend directly to small businesses. This indirect flow of institutional capital is enabling efficient, last-mile credit delivery to MSMEs that are traditionally underserved by the formal banking sector.
Why This Matters
Financial Deepening for MSMEs
The sector contributes over 30% of India’s GDP and employs more than 11 crore people, yet access to credit remains a major hurdle. AIFs, through innovative debt and credit structures, are helping bridge this gap.Boost to Fintech and NBFC Collaboration
AIFs are partnering with agile fintech players and NBFCs, bringing together tech-driven underwriting and long-term capital, creating a sustainable credit ecosystem for small businesses.Regulatory Push and Incentives
SEBI’s progressive stance, combined with GIFT City’s regulatory clarity and zero capital gains tax for eligible investors, is accelerating fund registration and deployment activity.Global Capital, Local Impact
With Indian AIFs in GIFT City allowed to raise foreign capital easily, global investors now play an indirect role in strengthening India’s domestic economy especially Tier II and Tier III markets.
RURASH Financials’ Strategic Perspective
At RURASH Financials, we view this development as a structural enabler for inclusive growth. The convergence of institutional capital, policy innovation, and fintech delivery models is shaping a future where alternative investments are no longer just about alpha they’re about impact.
Our curated access to GIFT City AIFs and specialised debt funds enables investors to participate in a well-governed, tax-efficient framework, while also contributing to India’s MSME empowerment agenda. We support both individual and institutional investors in identifying high-conviction opportunities in Category I and II AIFs, aligned with long-term growth trends.
Conclusion
The rise of AIFs in GIFT City as indirect funders of MSMEs is a milestone in India’s capital market evolution. It reflects a maturing ecosystem where alternative investments align with nation-building goals. As India’s small businesses continue to scale, the role of such capital structures will only grow in relevance.
To explore investment avenues in regulated AIFs with expert due diligence, transparent onboarding, and strategic advisory, connect with RURASH Financials your partner in creating solutions beyond numbers.