Alternative Investment Funds (AIFs) have become an important component of India’s alternative finance ecosystem by channelizing long-term capital into emerging and high-growth sectors. This study analyses the fund mobilisation, investment progress and sectoral investment trends of Alternative Investment Funds in India, with particular emphasis on the contribution of domestic and foreign investors. The study is based on secondary data published by the Securities and Exchange Board of India (SEBI) and covers Category I, II and III AIFs. The analysis reveals that Category I AIFs, especially Venture Capital Funds, attract significant foreign investment, while Category II AIFs dominate overall capital mobilization. Category III AIFs exhibit higher deployment ratios, reflecting active investment strategies. Sector-wise analysis indicates concentration in real estate, financial services and information technology, along with increasing diversification into healthcare and other sectors. The study concludes that AIFs in India demonstrate efficient capital deployment and play a growing role in supporting economic development.