SEBI Pushes REITs and InvITs to Mainstream, Targeting India's Infrastructure Financing Gap
SDG 9: Industry, Innovation and Infrastructure | SDG 8: Decent Work and Economic Growth
Institutions: Securities and Exchange Board of India (SEBI) | Ministry of Finance | National Highways Authority of India (NHAI)
In his address at the National Conclave on REITs and InvITs – 2025, SEBI Chairman Shri Tuhin Kanta Pandey affirmed that the next phase of India’s infrastructure story, crucial for reaching the Viksit Bharat goal, must be driven by capital markets, specifically through Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). India’s core sectors are estimated to require well over ₹700 trillion in investment by 2047, a scale public finance and bank credit alone cannot meet. Capital markets are uniquely positioned to meet this demand by channeling long-term savings into infrastructure projects, diversifying risk, and enforcing governance.
Currently, the combined Assets Under Management (AUM) of REITs, InvITs, and SM REITs is estimated at nearly ₹9.25 trillion as of October 2025 (₹7 trillion in InvITs and ₹2.25 trillion in REITs/SM REITs). However, the sector is still nascent, with retail participation low, and investor awareness estimated at only 10%.
To bridge the gap and strengthen the bridge between infrastructure and markets, SEBI has implemented several measures:
Key Regulatory and Developmental Interventions
Retail Focus: SEBI is working to make these products more retail-oriented and liquid. Measures include the reclassification of REITs as “equity” to facilitate passive index inclusion and allow equity Mutual Funds (MFs) to allocate more meaningfully.
Access and Liquidity: The minimum investment thresholds for InvITs have been reduced to increase the number of potential participants and improve liquidity. The creation of SM REITs (Small and Medium REITs) will make smaller, high-quality real estate assets accessible to retail investors.
Governance: Governance standards have been significantly strengthened by mandating e-voting and video-conferencing options for investors and by strengthening the rights of significant unitholders to nominate directors on the board of the manager.
Public Monetization: SEBI is actively coordinating with the Ministry of Finance and State Governments to accelerate public-asset monetization. The Chairman welcomed NHAI’s decision to establish a Public InvIT available to retail and domestic investors, hailing it as a “new era of public involvement”. State-level initiatives are also progressing, such as the Maharashtra Infrastructure Investment Trust.
SEBI is also coordinating with IRDAI, PFRDA, and EPFO to facilitate greater institutional participation. The regulator’s expectations are clear: Governance and investor interests will remain non-negotiable.
This aggressive regulatory push, defined by the shift towards retail access (SM REITs, reduced thresholds) and enhanced governance, is central to realizing India’s infrastructure financing goals. It establishes the capital markets as the primary long-term source for funding crucial assets, ensuring the continuous monetization and recycling of capital needed to meet the estimated ₹700 trillion investment requirement by 2047.
What is the significance of reclassifying REITs as “Equity”?→ The reclassification of Real Estate Investment Trusts (REITs) as “equity” instruments in the capital markets is a regulatory change by SEBI aimed at boosting liquidity and market depth. This reclassification allows diversified equity mutual funds to allocate a portion of their assets to REITs, paving the way for easier index inclusion, passive fund flows, and broader institutional adoption, making REITs a more mainstream option for investors alongside traditional equities.
Relevant Question for Policy Stakeholders: What specific capital allocation and regulatory changes are required from IRDAI and PFRDA to enable meaningful, large-scale participation by insurance and pension funds in the new Public InvITs and SM REITs to unlock long-term domestic capital?
Follow the full news here: National Conclave on REITs and InvITs