InvITs playing a pivotal role in India’s growth story

Infrastructure Investment Trusts (InvITs) have played an instrumental role in democratising access to high-quality infrastructure investments - assets that were once limited to direct ownership or blind-pool private equity participation.

Introduced in India in 2016 under the Indian Trusts Act, 1882, InvITs are SEBI-regulated investment vehicles allowing investors to own a share of income-generating infrastructure assets like highways, power/telecom lines, or renewable energy projects.

They offer the income stability of real assets, while also providing the liquidity, transparency, and regulatory safeguards of listed capital market instruments. Unlike illiquid, capital-intensive physical assets, InvITs are listed on stock exchanges (with unit price ranging between Rs 50 - 200) and can be liquidated easily. InvITs generate returns through two main components:

Regular Distributions: Income earned from user fees/tariffs in InvITs is distributed to the investors, creating a stable and regular income. 

Potential for Capital Appreciation: As InvITs do more value-accretive acquisitions, the value of the InvIT portfolio appreciates, leading to higher unit prices and creating long-term capital gains.

Benefits of investing in InvITs

InvITs provide a stable quarterly income flow, paying minimum 90% of net cash flows to unitholders. Investors can diversify their portfolios beyond conventional asset classes, by gaining exposure to multiple infrastructure projects. Moreover, their low correlation with equity markets makes them an effective portfolio hedge during subdued market conditions.

Additionally, infrastructure revenues often have inflation-linked characteristics – toll/tariff rates in InvITs can be indexed to CPI or WPI inflation, and power transmission tariffs are fixed-return (with pass-through of inflation on certain costs), creating an effective inflation hedge. SEBI also ensures that InvITs carry out regular valuations, maintain strong governance standards and transparency making them more trustworthy for investors.

Rise of InvITs in India

India currently has 6 publicly listed InvITs and 21 privately placed ones, collectively managing ~Rs 7 lakh crore in infrastructure assets. The listed InvITs have a combined market capitalisation of ~Rs 2.6 lakh crore. Currently, there are InvITs across 9 sectors with roads forming the single largest category of InvITs assets with 40% of AUM, followed by other sectors like power (transmission and generation), optical fiber, telecom towers, and warehousing etc. They have 3.7 lakh unitholders, and have distributed Rs 78,000 crore to investors since the first listing. Current distribution yields (Expected FY26 distribution divided by current unit price) for InvITs range from 9% to 19%.

Comparison with other asset classes

When compared to traditional asset classes like equities and bonds, instruments like InvITs and REITs offer a compelling hybrid investment, combining both fixed-income and equity features through dividend distributions plus unit price appreciation.

While Indian large-cap equities (Nifty 50 index) have historically delivered 12-13% annualised returns largely from price appreciation (with a modest ~1.5% dividend yield), InvITs combine stable, high-yield cash flows with moderate capital appreciation. For instance, an investor in IndiGrid InvIT, listed in 2017 at Rs 100, has received around 12-15% annual cash yield, and has seen a capital appreciation of 68%. This totals to 17.2% annualized returns as of December 12, 2025, making them attractive for income-seeking investors.

InvITs offer valuable diversification due to lower volatility and low correlation with equities. The Nifty REIT & InvIT Index’s volatility is about two-thirds that of the Nifty 50, with a beta of just 0.22. Like bonds, their prices are sensitive to interest rates, dipping when rates rise and becoming more attractive when rates fall. Historically, returns and risk for the REIT/InvIT index have consistently fit right between equity and debt, positioning them as a balanced, income-generating alternative.

The road ahead

As India’s infrastructure sector continues to expand, the demand for high-quality assets is expected to rise, supporting long-term value appreciation. InvITs will continue to reshape how we invest in real infrastructure, truly democratising access to high‑quality assets, while offering regular income with the benefits of liquidity and transparency in regulated structures.