Do the rules actually allow it?

Yes, and unusually bluntly. The AIF regulations say a fund "may raise funds from any investor whether Indian, foreign or non-resident Indians".

There is no nationality test and no residency test. Compare that with the portfolio management rules, which simply say nothing about residence at all.

What does it cost to get in?

The minimum is ₹1 crore. Employees and directors of the fund or its manager can come in at ₹25 lakh. Accredited investors have no minimum.

Usually that ₹1 crore is a commitment rather than a cheque. Closed-ended funds draw it down over several years as deals appear. Plan for the calls, because missing one can be costly under the fund documents.

How does the money get in, and back out?

This is the part that actually needs a decision, and it is easier to get right at the start than to fix later.

Units of an investment vehicle, which is what an AIF is, have their own route under India's exchange-control rules. Investing on a repatriable basis means your capital and gains can go back out. Investing on a non-repatriable basis means the investment is treated as domestic money, which is simpler but leaves proceeds in India.

Some funds actively prefer non-repatriable money, because it is not counted as foreign investment and so does not trigger downstream restrictions on what the fund can buy.

From an NRO account you can remit up to US $1 million per financial year, with documentation.

Does the category change anything for me?

Yes, in two ways.

  • Tax. Categories I and II pass income through to you, keeping its character, and you report it. Category III generally settles tax inside the fund, so you receive a post-tax return.
  • What it can hold. A Category III AIF that has taken foreign investment is restricted to instruments an FPI is allowed to hold. So your money arriving can narrow what the fund may buy.

Will a fund actually accept you?

That is a separate question from whether the law allows it.

Access is a commercial decision by each house, and your country of residence drives it. US residents are frequently declined, because taking the subscription drags the fund into US securities law. UK and UAE residents face fewer obstacles, but the tax outcome differs sharply between them.

Read the guide for the country you file in before you approach anyone.