Economy · 3 minutes read
Infrastructure Investment Trusts (InvITs) have become a cornerstone of India’s infrastructure financing landscape. Launched less than a decade ago, they channel long-term funds into critical projects such as highways, power transmission, and renewable energy. With assets under management of around ₹7 lakh crore today, InvITs have already outpaced REITs in scale and are expected to dominate India’s capital mobilisation for infrastructure in the coming years.
What is InvIT?
An Infrastructure Investment Trust (InvIT) is a SEBI-registered trust that owns and operates completed, revenue-generating infrastructure projects. These may include roads, power grids, pipelines, telecom towers, and renewable energy parks. Instead of the government or private companies solely financing these projects, InvITs pool funds from multiple investors. The earnings from tolls, tariffs, or user charges are then distributed to unit holders, providing a steady revenue model under SEBI’s regulatory framework.
Evolution
- 2014: SEBI introduced regulations for both REITs and InvITs.
- 2016: The first InvIT was registered in India.
- 2017 onwards: Several InvITs launched in roads, power transmission, and renewable energy sectors.
- 2025: India has 27 registered InvITs—5 publicly listed and 22 privately listed.
Rules and Regulations
- Regulator: SEBI regulates InvITs to ensure transparency and governance.
- Distribution Norm: At least 90% of net distributable income must be distributed to unit holders.
- Asset Criteria: At least 80% of investments must be in completed and revenue-generating projects.
- Structure: InvITs must have a sponsor (developer), trustee, and investment manager, creating a three-tier governance system.
Market Trends
- AUM: InvITs currently manage assets worth around ₹7 lakh crore.
- Growth: Together with REITs, InvITs have pushed total AUM beyond ₹9 lakh crore (2025).
- Projection: By 2030, combined REIT and InvIT AUM is expected to reach ₹25 lakh crore, with InvITs forming the bulk share due to the capital-intensive nature of infrastructure.
- Examples: IRB InvIT (roads), IndiGrid InvIT (power transmission), PowerGrid InvIT, India Infrastructure Trust (pipelines).
Significance
- Bridging Infrastructure Gap: India’s infrastructure needs are massive, and InvITs provide a structured way to mobilise capital.
- Reducing Fiscal Pressure: They reduce dependence on government budgets and bank loans for funding projects.
- Attracting Institutional Investors: Pension funds, insurance companies, and sovereign wealth funds prefer InvITs due to stable cash flows.
- Supporting National Missions: InvITs directly fund programmes like Bharatmala, Sagarmala, National Infrastructure Pipeline, and renewable energy targets.
Future Prospects
- Scale Expansion: InvITs are projected to see rapid growth in highways, renewable energy, and transmission.
- New Sectors: Likely entry into railways, airports, data centres, and urban infrastructure.
- Policy Push: Government and SEBI reforms will make InvITs even more attractive to global investors.
- Global Capital Integration: More foreign institutional participation expected as Indian infrastructure assets are securitised through InvITs.
InvITs in India are more than financing tools; they are a strategic mechanism to accelerate infrastructure growth while reducing pressure on public finances. With strong regulatory backing and rising investor confidence, InvITs are poised to shape the next phase of India’s infrastructure journey, aligning with the country’s long-term growth and development goals.