"With the high cost of operations in the initial years and a relatively longer gestation period, there is a case for re-consideration of Rs 10 crore networth criteria set from the present Rs 2 crore for obtaining a mutual fund licence," Confederation of Indian Industry (CII) and PriceWaterHouseCoopers said in their joint report.

This would ensure that only major players, who are committed to the mutual fund industry and capable of sustaining over a long-term period, are able to operate in the industry, the report said.

With more players entering the industry, the fees are likely to drop in the coming days, which may prompt the fund houses to seriously consider outsourcing, it said.

Moving ahead, mutual fund players would also have to bridge the demand-supply gap of human-assets needs and the companies should tie up with educational institutions to offer programmes dedicated to the financial services industry, the report added.

Similarly, there was a case for re-consideration of cap on the maximum amount of expenses that can be charged to a scheme, it said.

"Charging additional expenses would enable the fund houses to invest more on expanding the investor network and improvise on delivering quality services to the investors," the report said.

In the longer-term, mutual fund players will also have to enhance their association with other sectors, such as banking and telecommunications, to achieve deeper penetration in Tier-II and Tier-III cities.

"A few fund houses with deep pockets may be able to make necessary investments in the required technology. But in the long-term, it is indeed necessary to join hands with other sectors of the economy such as banking and telecommunications for the long-term benefit of all players in the industry," the report said.

Meanwhile, mounting cost of operations, including the lease rentals and staff costs, are likely to pose the biggest challenge for the mutual fund players, the report said.

Besides, the industry players should also actively come out to enhance the investor education activities as it would help them enable the overall expansion of the domestic mutual fund market, it said.