SEBI Weighs Wider Investment Options for REITs and InvITs to Deepen Market Participation

Mumbai — India’s market regulator is considering a proposal to expand the range of liquid mutual fund schemes available to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

The move aims to strengthen participation in these sectors and support long-term capital formation.

SEBI Chairperson Tuhin Kanta Pandey said the regulator is examining ways to broaden investment avenues for the trusts while ensuring strong investor protection.

The objective is to create a more flexible investment environment that can attract both domestic and global interest.

In his remarks, he noted that the regulator is also working toward enabling the inclusion of REITs in major market indices.
Such a development could significantly enhance visibility, increase institutional participation, and improve liquidity.

This initiative follows recent regulatory discussions aimed at permitting foreign investors and qualified institutional buyers to participate as strategic investors.

These steps are part of a broader strategy to strengthen capital inflows and position the trusts as a major component of India’s investment landscape.

SEBI is collaborating with several key bodies, including the Insurance Regulatory and Development Authority of India and the Pension Fund Regulatory and Development Authority.

The Employees’ Provident Fund Organisation is also part of the coordination efforts to widen access and participation in these asset classes.

Officials say the joint effort reflects a coordinated push across regulatory frameworks to ensure smooth implementation of future changes.

By aligning policies, the regulators aim to improve long-term stability and ensure investor confidence across the ecosystem of REITs and InvITs.

Pandey shared that the regulator is also evaluating the possibility of allowing private InvITs to participate in greenfield projects.
These early-stage developments could stimulate new investments in sectors such as energy, transportation, and urban infrastructure.

He emphasized that any permission for such participation would be paired with adequate safeguards to ensure transparency and reduce potential risks.

The focus remains on ensuring that expansion does not compromise the stability of the financial system or investor interests.

India’s REIT and InvIT frameworks have evolved steadily over the past decade, emerging as important vehicles for attracting institutional capital.

They provide opportunities for investors seeking stable, long-term returns backed by real estate and infrastructure assets.

Market experts note that easing investment rules and broadening fund options could boost flexibility for trust managers.
Greater flexibility may also help ensure better yield management and more efficient capital allocation.

The inclusion of REITs in benchmark indices could be a particularly important milestone for the sector.
Index inclusion typically encourages higher participation from passive funds and international investors tracking the benchmarks.

The regulator’s renewed focus comes at a time when India is witnessing rapid expansion in commercial real estate, logistics, renewables, and urban infrastructure.

REITs and InvITs are increasingly seen as essential tools to channel large-scale funding into these growing segments.

Industry leaders expect that widening liquid mutual fund options could improve liquidity management for trust managers.
This would allow them to better navigate market volatility, especially during periods of rapid expansion or regulatory adjustments.

The proposed reforms could also help deepen India’s capital markets more broadly.

Experts say that providing more investment avenues for REITs and InvITs aligns with India’s goal of building stronger and more diversified financial markets.

Stakeholders are now awaiting further clarity as SEBI continues consultations and evaluates feedback from market participants.
Any formal changes would likely undergo phased implementation to ensure smooth adoption across the investment ecosystem.

Analysts believe that gradual reforms and increased coordination between regulatory bodies may pave the way for greater global interest.
If executed effectively, the moves could enhance India’s standing as a competitive and reliable investment destination.

SEBI is expected to release more detailed statements as discussions progress.
Investors, fund managers, and institutional partners will be watching closely for updates that may shape future strategies.