India’s Alternative Investments market is poised for a major leap, with assets under management (AUM) projected to grow from USD 136.1 billion in 2024 to USD 247 billion by 2029, according to a new report released by CareEdge Advisory and Research. This reflects a robust compound annual growth rate (CAGR) of over 13%, driven by rising domestic capital flows, regulatory evolution, and growing appetite for portfolio diversification.

Despite India’s rapid economic ascent—set to become the world’s third-largest economy by 2028—alternative investments remain underpenetrated at just 4% of GDP, compared to over 10% in mature markets like the US and Europe. CareEdge identifies this gap as a significant growth opportunity, especially as high-net-worth individuals (HNIs) and ultra-HNIs increasingly seek non-traditional, higher-yield assets.

Key Highlights from the Report

• Domestic Capital Gains Ground:
  The share of domestic capital in Alternative Investment Funds (AIFs) rose from 59.1% in FY24 to 63.3% in FY25. Domestic capital raised jumped 44% year-on-year, reflecting growing confidence in Indian investment vehicles.
  

• Private Credit and Real Assets to Drive Growth:
  These two segments, which made up 37% of AUM in 2024, are expected to reach 46% by 2029, driven by infrastructure momentum and institutional interest in stable-return asset classes.

• Fund Mobilisation Surges:
  Total funds raised in FY25 stood at ₹6.4 trillion, up from ₹4.8 trillion in FY24. Over the last five years, commitments to AIFs jumped from ₹1.5 trillion in 2020 to ₹13.5 trillion in 2025.
  

• Sectoral Focus Expands:
  AIFs are actively deploying capital across real estate, BFSI, fintech, healthtech, renewable energy, and IT/ITeS, offering a mix of cyclical resilience and future-facing growth.

• Enabling Ecosystem Fuels Momentum:
  Regulatory clarity by SEBI, increased financial literacy, digitisation, and greater retail and institutional participation are deepening India’s capital markets and enabling alternatives to flourish.

Tanvi Shah, Senior Director at CareEdge, remarked, “India’s alternative industry is poised for a transformative decade. The strong growth momentum reflects structural drivers like economic strength, regulatory clarity, and increasing domestic participation from family offices, insurers, and pension funds.”

While the outlook remains positive, the report also flags challenges such as limited retail awareness, regulatory uncertainty in select segments, and the need for a more developed secondary market. Still, with a strong macroeconomic foundation and rising interest from deep-pocketed institutions, the Alternatives market is expected to play a pivotal role in India’s long-term financial evolution.

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