India's IVCA CAT III Summit in 2025 to Highlight Innovation, Expansion, and Performance in the Rapidly Growing Alternative Asset Class of the Nation
The future of India's capital markets is looking bright, with Category III AIFs taking centre stage. These funds, known for their complex trading strategies including leverage and derivatives, have been a driving force in the country's financial evolution.
At the recent IVCA CAT III Summit 2025, industry leaders discussed the current state and future outlook of these funds. The summit highlighted a significant regulatory and tax clarity, alongside a positive growth trajectory for Category III AIFs.
A Boost from the Delhi High Court Ruling
A key development impacting Category III AIFs was the Delhi High Court ruling in 2025. The court declared unlawful the Central Board of Direct Taxes (CBDT) Circular No. 13/2014, which required these funds to disclose investor names in the trust deed. The court ruled this requirement inconsistent with SEBI regulations, stating that failure to mention investor names does not render a Category III AIF as an “indeterminate trust” subject to the maximum marginal tax rate. This ruling supports normal taxation and enhances regulatory certainty for Category III AIFs structured as trusts.
A Promising Future for Category III AIFs
The IVCA CAT III Summit 2025 emphasized several key points about the future of Category III AIFs:
- Growing Importance as a Dynamic Asset Class: Category III AIFs are expected to play a more significant role in India’s capital markets, offering innovative investment strategies and potential high returns.
- Focus on Innovation-led Strategies: The future of Category III AIFs lies in advanced financial instruments and strategies that can generate alpha returns across market cycles.
- Increasing Institutional and Non-Resident Investor Participation: With recognition of their complex but potentially high-return investment strategies, institutional and non-resident investors are expected to participate more in Category III AIFs.
- Expansion of Fund-raising Activities and Investment in New Sectors: The fast-growing alternative asset ecosystem in India is expected to lead to more fund-raising activities and investments in new sectors by Category III AIFs.
- Enhanced Regulatory Clarity and Supportive Tax Rulings: The expectation is for further regulatory clarity and more supportive tax rulings, encouraging capital inflows and growth in Category III AIFs.
The IVCA CAT III Summit 2025
The IVCA CAT III Summit 2025, scheduled for 6th August 2025 in Mumbai, aims to decode key trends, navigate regulatory developments, and craft a forward-looking roadmap for the Category III AIFs ecosystem. Partners for the summit include 3P, DSP, Vivriti Asset Management, and Nuvama as the Custody and Clearing Partner.
As of FY25, there were Rs. 2.3 lakh crore in capital commitments across 371 registered Category III AIFs. Udit Sureka, EVP and Head of Products at Nuvama Asset Services, believes that Category III AIFs are redefining the future of alpha in India's alternatives landscape.
In summary, Category III AIFs stand at a promising juncture with legal and regulatory frameworks evolving favorably, positioning them as a key driver of innovation and alpha generation in India's alternative investment landscape. The IVCA CAT III Summit 2025 underscores this potential and provides a platform for industry leaders to discuss and shape the future of these funds.
- Significant investments are expected to flow into India's capital markets, given the promising future of Category III AIFs, which are poised to play a more substantial role as a dynamic asset class.
- In order to generate alpha returns across market cycles, the future of Category III AIFs lies in their focus on advanced financial instruments and innovation-led strategies.
- With the Delhi High Court ruling supporting normal taxation and enhancing regulatory certainty for Category III AIFs structured as trusts, there will be more institutional and non-resident investors participating in these funds.
