Next Phase for REITs, INVITs: Sebi eyes index inclusion to boost market liquidity

Tuhin Kanta Pandey, chairman of Securities and Exchange Board of India Friday said the market regulator is eyeing the inclusion of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INVITs) into market indices through a calibrated guide path, signalling a major policy shift. Inclusion of REITs and INVITs  could help in improving the liquidity and visibility of these instruments to a wider investor segment, he said.

Speaking at the 1st National Conclave of REITs & INVITs, 2025 in Delhi, Pandey said that the next phase for growth in REITs and INVITs in India was to be included in market indices, which could generate large passive flows into these segments. Enhancing market access and bringing in institutional participation through a policy signal from the regulator could materially promote the role of these instruments in funding long-term capital and infrastructure needs of the country, he said.

Pandey said increasing liquidity in REITs and INVITs is important. India’s REIT market is the fourth-largest in Asia, but the depth of the market was limited compared to the top three REIT markets – Japan, Singapore, and Hong Kong  by a wide margin.

“Retail participation in REITs and InvITs is still low. Our investor survey shows that awareness about these instruments is around 10 per cent, with penetration less than 1 per cent. This must change,” Pandey said.

In terms of investor participation, the combined assets under management of REITs and INVITs, along with small and medium REITs are estimated to be around Rs. 9.25 trillion. 

Pandey said REITs and INVITs can play a central role through capital markets in building India’s infrastructure. Additionally, the markets regulator is working closely with the finance ministry and state governments to increase monetisation of public assets, he said. Raising capital through initial public offerings and rights issues will also be simplified, he said.

Further, the regulator is also considering widening the pool of liquid mutual funds where REITs and INVITs can invest, in order to increase market participation, Pandey said.

"We are examining a proposal to expand the pool of liquid mutual fund schemes, in which REITs and InvITs can invest, while safeguarding investor interests," Pandey said.

Sebi is also working with other regulators such as the Insurance Regulatory and Development Authority of India, Pension Fund Regulatory and Development Authority, and Employees' Provident Fund Organisation for boosting participation and generating higher capital inflows into the sector.

This follows the move by the regulator months ago, which allowed foreign investors and qualified institutional buyers to participate in trusts as strategic investors.