The regulatory landscape of Alternative Investment Funds (AIFs) in India has undergone significant transformation since the enactment of the SEBI (Alternative Investment Funds) Regulations, 2012. Despite rapid industry growth, challenges persisted in transparency, taxation, and systemic oversight, prompting a comprehensive overhaul by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) in 2025. This paper examines the structural, supervisory, and policy changes introduced through the reforms and analyzes their implications for India’s fund ecosystem. The study highlights five key areas of reform: restructuring of fund categorization to prevent regulatory arbitrage, enhanced disclosure and transparency norms, robust risk-management and investor protection mechanisms, stringent cross-border capital flow regulations, and adoption of digital compliance frameworks. Judicial precedents from the Supreme Court and High Courts of India, alongside global regulatory models such as the EU AIFMD and the U.S. Investment Advisers Act, inform the analysis and establish the comparative dimension of the reforms. The findings suggest that while the overhaul strengthens investor protection, improves systemic resilience, and aligns Indian AIF regulation with international standards, it also raises concerns of compliance burdens, dual regulatory overlaps, and incomplete taxation reforms. The paper concludes with policy recommendations advocating harmonization of SEBI and RBI mandates, uniform tax treatment across fund categories, expansion of technology-driven supervision, and integration of ESG obligations. These reforms are positioned not only to consolidate India’s domestic market but also to enhance its credibility as a global hub for private equity, venture capital, and alternative investments.