India's investment fund sector has witnessed remarkable growth in recent years, driven by increasing participation from both retail and institutional investors. As of December 31, 2025, assets under management (AUM) stood at ₹80.23 lakh crore, down from ₹80.80 lakh crore in November 2025. Further, Real Estate Investment Trusts (“REITs”) were formally reclassified as equity-related instruments effective January 1, 2026, fueled by a surge in demand for commercial real estate along with increased government spending on infrastructure projects including expressways, railways, airports and ports. Moreover, the International Financial Services Centre (“IFSC”) in Gandhinagar, Gujarat, is witnessing substantial progress with the government keen to attract global funds by offering favorable taxation benefits and a business-friendly environment under the new unified registration norms for intermediaries.
The month January 2026 marked a concentrated phase of regulatory action, with SEBI and IFSCA introducing a series of targeted reforms aimed at enhancing regulatory clarity, market integrity, and ease of doing business. During this month, key developments included the notification of the Stock Broker Regulation, 2026, the introduction of the SWAGAT-FI regime for foreign investors, and relaxations for Large Value and Angel Funds regarding operational filings. Collectively, these initiatives reflect a risk-calibrated and globally aligned regulatory approach, reinforcing investor protection while supporting innovation and sustainable market growth.
In this regulatory update, we explore these developments in the field of investment funds elaborating on their potential impact on stakeholders and discussing the efficacy of such developments.
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