SEBI considering inclusion of REITs, InvITs in market indices to boost liquidity

SEBI Chairperson Tuhin Kanta Pandey announced on Friday that the regulatory body is examining the potential inclusion of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in key market benchmarks.

Pandey emphasized this strategic review would follow a gradual, phased implementation to enhance market depth, increase visibility, and attract broader institutional engagement with these investment vehicles.

Speaking at a New Delhi industry event, Pandey framed this initiative as a pivotal policy shift for India’s emerging REIT and InvIT sector. He stressed their critical role in mobilizing capital for infrastructure development.

“Despite ranking as Asia’s fourth-largest REIT market, India’s volumes remain subdued. Retail participation hovers near 1% with limited trading activity,” Pandey noted.

Combined assets under management for REITs and InvITs totaled ₹9.25 trillion as of October, spanning 24 listed InvITs and multiple REIT listings.

The regulator is assessing multiple reforms to expand market access, including: authorizing liquid funds to invest in these instruments, reclassifying REITs as equity products to improve tradability, and reducing minimum investment thresholds to democratize participation.

Pandey further proposed involving prominent non-banking financial institutions as anchor investors to strengthen market foundations.

The chairperson highlighted capital markets’ growing significance in financing India’s infrastructure ambitions. National Bank for Financing Infrastructure and Development estimates indicate ₹700 trillion in sectoral investments will be needed by 2047 for energy, transportation, and urban development projects.

Pandey confirmed SEBI’s collaboration with the Finance Ministry and state administrations to accelerate public asset monetization. Unlisted public entities like the National Highways Authority of India retain flexibility to establish InvITs, he added, while noting continued efforts to simplify IPO and rights issue processes.

While reaffirming SEBI’s commitment to governance standards, Pandey stressed the need for improved investor communication in regional languages to widen participation. “Surveys reveal investors prefer vernacular disclosures – simplicity and accessibility must drive our outreach strategies,” he concluded.

(With inputs from IANS)