We are part of an evolving ecosystem where technology and digitisation are now being leveraged to solve multiple pain points cutting across sectors and industries. In the past few years, the Government has realised the importance of ensuring that all individuals, regardless of their socioeconomic status, have access to essential financial services and opportunities within the infrastructure sector. This has led to widespread acceptance and a more active regularisation of InvITs in India. Ms. Madhabi Puri Buch, SEBI chairperson, at a recent SEBI-NISM Research Conference, highlighted the importance of investing in InvITs and REITs and stated that the fractional ownership of the real estate and infrastructure is where the strength of India will lie. Furthermore, RBI has put into place policies that ensure that the structure of the governance and disclosures of these asset classes are in order so that investors can confidently invest in these asset classes.
CEO
NDR InvIT Managers.
InvITs have emerged as a powerful tool for democratising access to infrastructure investments, offering retail investors the opportunity to participate in the ownership and revenue streams of large-scale infrastructure projects. By pooling funds from a diverse set of investors, including retail investors, InvITs provide a means for individuals to indirectly invest in critical infrastructure assets such as highways, roadways, warehouses, power transmission lines, pipelines, and telecommunications towers.
The Government of India has been focusing heavily on the infrastructure sector. The Union Finance Minister revealed a significant 11.1% surge in the Capital Expenditure outlay for 2024-25, totaling ₹11,11,111 crore, which represents 3.4% of the GDP. Additionally, in the past 3 years, the government has spent approximately INR 23 lakh crore on infrastructure. Focusing on the Government’s push on infrastructure, InvITs will play a massive role in helping India attain its economic growth goals in the coming years. InvITs also promote social inclusion by empowering retail investors to become stakeholders in infrastructure projects that have a tangible impact on their communities. Whether it’s a toll road that reduces travel time and congestion or a renewable energy project that promotes environmental sustainability, infrastructure investments funded through InvITs allow people to not only feel financially included but also feel socially responsible.
The advent of UPI has indeed catalysed a structural transformation not only within the payments landscape but across the entire financial industry. Its far-reaching benefits are evident, extending to various socio-economic households, thereby positively impacting businesses, corporates, institutions, and the government alike. Much like investments in physical infrastructure, investments in building a robust digital landscape have yielded significant dividends, leading to heightened operational efficiencies and reduced costs across industries. This shift is palpable, reflected in India’s remarkable ascent from the 54th position to the 38th position in the World Bank’s Logistics Performance Index over the past decade. Such progress is attributable not only to substantial investments in infrastructure projects like highways, Multi-Modal Logistics Parks (MMLP), and railways but also to proactive policy measures such as the National Logistics Policy (NLP) and Bharat Mala initiative, which have collectively contributed to enhancing the country’s logistical capabilities.
The recent initiatives by the RBI in bringing down the minimum investment limits, introduction of SME REITs, etc. have helped widen the products’ availability to the retail investors. Infrastructure investments, though relatively a stable asset class, require both long-term, and patient capital. In the past five years, InvITs have emerged as a vital source of capital for both the State and Private Operators across various sectors, including highways, energy transmission, data centers, and warehouses. Typically structured as AAA-rated vehicles and regulated by SEBI, these trusts are managed by competent managers who adhere to high governance standards.
In recent times, InvITs have garnered substantial interest from institutional investors for several reasons, chief among them being the secured nature of investments, predictability of returns, and tax advantages they offer. This growing appetite underscores the increasingly recognised value and attractiveness of InvITs as a vehicle for infrastructure investment, both for institutional players and retail investors seeking stable, long-term returns. InvITs can play a transformative role in advancing India’s infrastructure agenda while empowering retail investors to participate in the country’s economic growth story. They can emerge as a powerful tool for promoting financial inclusion and creating a more inclusive and prosperous society for all.
