On October 23, 2025, the International Financial Services Centres Authority (“IFSCA”), in line with the Government of India’s vision to position GIFT IFSC as a global hub for sustainable and climate finance, released a Consultation Paper on the ‘Regulatory Framework for Differential Distribution in Restricted Schemes and Venture Capital Schemes to Facilitate Blended Finance and Other Fund Structures’ (“Consultation Paper”).[1] This initiative stems from the broader national agenda announced by the Hon’ble Prime Minister and Finance Minister to mobilize global capital for sustainable and climate-aligned investments through the GIFT City platform.
India’s climate and sustainable development goals are estimated to require investments of USD 10 Trillion (Ten Trillion United States Dollars) to USD 20 Trillion (Twenty Trillion United States Dollars). To meet this enormous financing need, blended finance which combines public or philanthropic capital with private investment has emerged as a key mechanism for catalyzing private sector participation.
Recognizing this, IFSCA seeks to introduce a regulatory framework enabling differential distribution mechanisms within fund structures, thereby allowing fund managers to design flexible, blended, and impact-oriented vehicles under the IFSCA (Fund Management) Regulations, 2025.
Key Highlights of the Consultation Paper
- The Consultation Paper applies to Restricted Schemes and Venture Capital Schemes managed by Fund Management Entities (FMEs) registered with IFSCA.
- The Consultation Paper aims to enable differentiated distribution structures within a single fund allowing varying return profiles or priority distributions across different investor classes (e.g., philanthropic, institutional, and commercial investors).
- The proposed framework under the Consultation Paper emphasizes on transparency, disclosure, and investor protection to ensure fairness across investor categories.
- This Consultation Paper builds upon the success of the existing IFSCA fund management regime under which, as of June 30, 2025, there are 177 (One Hundred and Seventy-Seven) registered FMEs, 272 (Two Hundred and Seventy-Two) launched schemes, with aggregate commitments of USD 22.11 Billion (Twenty-Two Point One-One Billion United States Dollars) and cumulative investments exceeding USD 11 Billion (Eleven Billion United States Dollars).
Stakeholder Consultation
IFSCA has invited public comments and suggestions from stakeholders, market participants, and the general public on the proposed framework under the Consultation Paper latest by November 11, 2025.
[1]https://ifsca.gov.in/CommonDirect/GetFileView?id=47a297ad49aaae8fa365313a911dd81a&fileName=Press_Release_on_BF_Consultation_Paper_23102025_1__20251024_1133.pdf