How Sebi's New Proposal Could Bring More Foreign Money Into Reits, InvITs

The Securities and Exchange Board of India (Sebi) has proposed a framework that would allow real estate investment trusts (Reits) and publicly-listed infrastructure investment trusts (InvITs) to issue depository receipts (DRs) in overseas markets, opening another route for foreign investors to participate in India's real estate and infrastructure sectors.

The proposal, released through a consultation paper on August 4, 2026, seeks to introduce enabling provisions under the Reit and InvIT Regulations, which currently do not provide an operational framework for issuing DRs even though existing laws permit such instruments.

The proposals are based on recommendations from Sebi's Hybrid Securities Advisory Committee (HYSAC). Through the consultation paper, Sebi has invited feedback from market participants and other stakeholders until August 25 on two proposals. The first is to allow Reits and publicly listed InvITs to issue DRs. The second is the draft framework that lays down how these DRs will be issued.

Why Sebi Wants The Change

According to the regulator, Reits and InvITs can already raise money from overseas investors under the Foreign Exchange Management (Non-Debt Instruments) Rules. However, they do not have a mechanism similar to that of listed companies for issuing depository receipts overseas.

Sebi said in the consultation paper, that “a framework for issuance of DRs on units of Reits and InvITs will enable Reits and InvITs to issue DRs in permissible jurisdictions, thereby providing an additional investment option for foreign investors”. It added that such instruments “will be beneficial for foreign investors, as DRs allow trading in foreign currency on the permitted international exchange(s). It will also help in attracting foreign capital in Reits and InvITs”.

The regulator said that units of Reits and InvITs are already recognised as "permissible securities" under the Depository Receipts Scheme, 2014, while the Foreign Exchange Management framework also allows overseas investors to invest in these trusts. The missing piece, Sebi said, is an enabling provision under the Reit and InvIT Regulations.

Framework To Mirror Existing DR Rules

To operationalise the proposal, Sebi plans to insert a new provision in both the Reit and InvIT Regulations. It said: “Depository Receipts may be issued against units of a Reit/publicly-offered InvIT subject to compliance with these regulations and in such manner as may be specified by the Board”.

The consultation paper also proposes issuing a separate circular containing the detailed operating framework. Sebi said the draft framework has been prepared using the existing equity depository receipt framework as the base, with suitable changes for Reits and publicly-listed InvITs.

Private InvITs Left Out

The proposal does not cover privately-listed InvITs. Explaining the exclusion, Sebi said privately-listed InvITs have a minimum trading lot of Rs 25 lakh and can issue units only to institutional investors and body corporates at the time of the initial offer. 

"Similar restrictions cannot be enforced on DR which are issued and traded on the back of such units in the permissible jurisdiction(s)," the regulator said. It has, therefore, proposed allowing DR issuance only for Reits and publicly-listed InvITs.