What SEBI’s GARUDA Proposal Means for India’s Investment Future
The Securities and Exchange Board of India (SEBI) has proposed the major reform for the country’s rapidly expanding Alternative Investment Fund (AIF) sector. SEBI has proposed the new initiative which called as GARUDA and it also plans to significantly reduce the time required for the launching of AIGs schemes. This proposal will aims to improve the ease of doing business and faster capital deployment.
SEBI has introduced the proposal for GARUDA which stands for (Green-Channel: AIF Rollout Upon Document Acknowledgement).
This framework is designed to simplify and speed up the process of the launching of AIF schemes.
Currently the AIFs can launch their schemes only after waiting for the 30 days from the date of filing the Placement Memorandum (PPM) with regulator.
Under the newly proposed GARUDA system the eligible AIF schemes may be allowed to launch within just 10 working days unless the SEBI raises the any objections during the review period.
This proposal is expected to make the fundraising quicker and improve efficiency in India’s investment ecosystem.
The AIF industry in India has expanded rapidly over the last couple of years. According to SEBI, the number of registered AIFs increased from the 732 five years ago to 1,849 as of March 31, 2026.
The regulator also highlighted that,
This data are till the period of December 31, 2025.
One of the most important aspects of the proposal is the relaxation for the Accredited Investor only (AI=only) schemes and Angel Funds.
Under the new framework,
This change is expected to reduce the compliance burden and improve operational efficiency for fund managers.
The accredited investors are individuals or entities that which meet the specific income or net worth criteria defined by SEBI. These investors are set to be considered financially sophisticated and capable of understanding higher risk investment products.
The number of accredited investors in India has grown sharply i the last years,
As per SEBI’s latest data, accredited investors held the AIF investments worth around ₹1.91 lakh crore which is accounting for nearly 30% of total AIF investments.
The newly proposed GARUDA framework will bring several advantages to the financial sector.
Although the process may become faster but on the other side SEBI has clarified that regulatory oversight will continue.
The regulator also plans to conduct post facto scrutiny of scheme documents based on risk assessment.
If any disclosure violations or irregularities are found, Sebi may initiate the regulatory action against the concerned entities.
The Alternative Investment Funds (AIFs) are privately pooled investment vehicles which collect money from investors and invest in assets beyond traditional stocks and bonds.
AIFs in India are broadly classified into three categories,
Category I AIFs
These include,
Category II AIFs
These include,
Category III AIFs
These include,
The AIFs have become increasingly important to financing the startups, infrastructure and emerging businesses in India.
Also SEBI has invited public comments on the GARUDA proposal until the June 1, 2026.
After the reviewing feedback from stakeholders the regulator may finalize and implement the framework.
The market experts believes that the proposal could become one of the most important reforms in the India’s alternative investment space in recent years.
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