India’s AIF Industry Crosses Rs 15 Lakh Crore as Domestic Capital & Liquidity Reshape Private Markets

Why It Matters

The growth signals a transition toward a domestically‑driven, liquid private‑capital market that can fund innovation and infrastructure with reduced foreign exposure. This evolution positions AIFs as a stable, core component of institutional portfolios in India.

Key Takeaways

• AIFs delivered ~8.7% alpha over Sensex
• Domestic investors now hold ~55% of AIF commitments
• Secondary market activity exceeds ₹377 billion annually
• AIFs shifting from satellite to core portfolio allocation
• Liquidity improvements reduce lock‑up perception

Pulse Analysis

The Indian alternative investment fund (AIF) market has breached the ₹15 lakh crore threshold, a milestone that reflects both scale and maturation. This surge is driven by a confluence of factors: robust venture‑capital pipelines, a deepening startup ecosystem, and regulatory reforms that have clarified fund structures. Compared with public equities, equity‑focused AIFs have consistently generated around 8.7 % excess returns, positioning private capital as a reliable source of alpha. Investors now view AIFs not merely as opportunistic bets but as integral components of diversified portfolios.

Domestic capital has become the dominant force, supplying roughly 55 % of commitments across Category I and II funds. The rise of family offices, high‑net‑worth individuals, and institutional players reduces dependence on foreign limited partners and insulates the market from external liquidity shocks. This home‑grown investor base also brings a longer investment horizon, encouraging patient capital for growth‑stage enterprises. As a result, fund managers can pursue deeper due‑diligence and longer holding periods, which in turn enhances value creation and aligns with India’s broader ambition to fund innovation domestically.

The secondary market is emerging as a critical liquidity engine, with annual transactions topping ₹377 billion. These deals facilitate price discovery, enable capital recycling, and allow investors to manage duration without sacrificing exposure. The growing sophistication of secondary platforms is reshaping the perception of AIFs from “lock‑and‑hope” to a more fluid asset class, encouraging even conservative allocators to treat them as core holdings. Looking ahead, sustained capital inflows, improved exit mechanisms, and tighter regulatory oversight are likely to cement AIFs as a cornerstone of India’s private‑market financing landscape.

India’s AIF industry crosses Rs 15 lakh crore as domestic capital & liquidity reshape private markets

By Kshitij Anand, ETMarkets.com · Last Updated: Feb 18 2026, 09:34 AM IST

India’s Alternative Investment Fund (AIF) sector has surpassed ₹15.05 lakh crore in cumulative commitments, signalling a shift toward institutional maturity in private capital markets. The “No Ifs About AIFs 2026 – Edition III” report (jointly prepared by Crisil Intelligence and Oister Global) highlights three key trends driving this evolution:

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Consistent Alpha Over Public Markets

Equity‑oriented AIFs have generated ≈ 8.69 % alpha versus the BSE Sensex TRI across seven benchmarking cycles. This outperformance underscores the ability of private‑market strategies—especially venture and growth‑equity—to capture value beyond volatile public‑market valuations. The data positions AIFs as structured return‑generating vehicles rather than merely tactical satellite allocations.

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Domestic Capital Now Dominates

Domestic investors now account for ≈ 55 % of commitments in Category I and II AIFs. This shift reduces reliance on foreign limited partners, lessening exposure to global liquidity cycles and foreign‑portfolio volatility. It also reflects growing confidence among Indian family offices, high‑net‑worth individuals and domestic institutions in private‑market allocations as a long‑term strategy.

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Secondaries Emerge as a Liquidity Engine

Secondary‑market transactions have risen to > ₹377 billion annually, providing structured liquidity pathways within India’s private‑market ecosystem. These deals improve price discovery, enable capital recycling and allow duration management for long‑term allocators, moving AIFs away from the “lock‑and‑hope” perception.

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From Alternative to Core Allocation

Sustained alpha generation, rising domestic participation and enhanced liquidity frameworks are prompting sophisticated investors to treat AIFs as a core portfolio allocation. Broader macro trends—formalisation of capital markets, tighter regulatory oversight and a thriving startup ecosystem—further support this transition.

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The Road Ahead

As the Indian economy expands and wealth pools deepen, private capital is expected to play an increasingly pivotal role in financing innovation, infrastructure and growth‑stage enterprises. Future success will hinge not only on raising capital but also on efficient deployment, timely exits and disciplined portfolio management.

The crossing of ₹15 lakh crore in commitments marks a milestone, yet the structural changes—consistent alpha, domestic‑capital dominance and the institutionalisation of secondaries—signal that India’s AIF industry is moving from rapid expansion toward sustainable maturity.

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