India’s Next Capital Shift: IVCA–360 ONE–CRISIL Report Makes Case for Mobilising Long-Term Domestic Pools

New Delhi, 2 December 2025: India’s alternate capital industry is undergoing a structural shift, and a new joint study released today by the Indian Venture and Alternate Capital Association (IVCA), 360 ONE Asset and CRISIL highlights the expanding role of domestic institutions in shaping the country’s next decade of growth. The IVCA–360 ONE–CRISIL Report: Unlocking Domestic Capital: Key to India’s AIF Growth, 2025, unveiled at the IVCA DII & Exits Forum, offers one of the most detailed assessments to date of India’s evolving AIF landscape and the growing momentum behind homegrown capital.

AIFs: India’s Fastest-Growing Investment Vehicle

The study shows that commitments to AIFs have risen sharply—from ₹0.84 lakh crore in 2017 to ₹13.49 lakh crore in 2025—reflecting both the sector’s depth and the maturation of India’s regulatory framework. The report draws attention to the growing sophistication of the ecosystem, supported by clear valuation norms, detailed disclosures and a governance environment that has evolved rapidly over the last few years.

“AIF commitments have grown 16x since 2017, and domestic LPs (Domestic institutional investors and Family Offices) now contribute 52.7% of capital in Category I & II funds. This shift reflects rising confidence in India’s private markets. As the ecosystem matures, deeper domestic participation will be central to financing India’s next decade of deep-tech, innovation, infrastructure and long-term economic growth.” said Rajat Tandon, President, IVCA.

Domestic Capital Gaining Ground, But India Is Still Early in the Cycle

The report highlights steady gains in domestic LP participation in Category I & II AIFs over the past year. Government-backed entities have committed ₹24,293 crore through major fund-of-funds programmes, showcasing rising national confidence in alternatives. Yet, India remains significantly under-penetrated compared with global markets. Pension funds, provident funds and insurers together manage over ₹100 lakh crore but remain modest participants in private markets—representing one of the biggest opportunities for India’s next growth cycle.

Sameer Nath, CIO & Head, Venture Capital & Private Equity, 360 ONE Asset, said “India’s next phase of growth will rest on the strength of its own capital. DIIs today are showing strong conviction to back differentiated alternative assets strategies and high-performing fund managers. 360 ONE is delighted to partner with IVCA and CRISIL on this pathbreaking report. We have witnessed the evolution of alternative assets in India from the closest vantage point possible. For example, we have seen our UHNI and Family Office clients increase their allocation to alternatives exponentially over the last decade and believe there is ample headroom for further growth.”

Performance Strong Across Strategies, Offering a Compelling Entry Point

Venture capital AIFs continue to deliver robust pooled IRRs of 22.9%, consistently outperforming public benchmarks. Debt and real-estate AIFs demonstrate faster-than-expected capital return, with nearly one-third of funds achieving DPI of one within four to six years. The report notes that this is an especially favourable moment for domestic investors to participate earlier—particularly in startups, SMEs, technology and sunrise sectors that will anchor India’s future listed markets.

“Today, the AIF industry offers a variety of investment strategies across numerous funds, with mandatory performance benchmarking serving as a vital analytical tool that enables investors to make informed decisions and navigate their options more effectively,” said Jiju Vidyadharan, Senior Director, Crisil Intelligence.

India’s Exit Environment Strengthens Capital Recycling

India recorded 552 IPOs between FY23 and FY25, alongside a surge of listings in the SME segment. Improved exit visibility, coupled with rising domestic equity inflows, is strengthening the capital-formation cycle and enabling investors to recycle capital into newer vintages. This shift mirrors the long-term trend of increasing domestic ownership in public markets and signals a similar transition underway in private markets.

DII & Exits Forum to Bring Policymakers and Institutions Together

The report will be launched at the DII & Exits Forum 2025 in New Delhi, where senior representatives from the Department of Science & Technology, PFRDA, DPIIT and leading domestic institutions will discuss the findings. Conversations will focus on policy alignment, liquidity solutions, secondaries, and pathways to deepen domestic institutional participation across private markets.

A Decisive Shift Toward India’s Homegrown Capital Economy

The report frames the coming decade as a turning point where India’s own institutions—pension funds, insurers, banks, family offices and resident investors—can play a far greater role in financing the country’s innovation, infrastructure and economic leadership. With performance visibility, improving exits and rising governance standards, India is poised to build a truly homegrown capital ecosystem.