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India’s Infrastructure Investment Trusts (InvITs) market is on track for explosive growth, with total assets under management (AUM) expected to nearly triple to about Rs. 21 lakh crore by 2030. The surge will be powered by growing institutional participation, government-backed infrastructure spending, and favorable regulatory changes, according to a new white paper by Client Associates (CA) titled “InvITs in India: A Comprehensive Analysis 2025.”
InvITs, short for Infrastructure Investment Trusts are pooled investment vehicles that own and operate income-generating infrastructure assets such as highways, power transmission lines, and logistics parks. They function somewhat like mutual funds, but instead of stocks or bonds, InvITs invest in physical assets. These trusts can be listed publicly or privately, providing investors with varying levels of access, liquidity, and minimum investment requirements, all under a tightly regulated and transparent framework.
As of FY2025, India has 27 registered InvITs, which includes 24 listed (six public and 18 private) and three unlisted, with combined assets of Rs. 6.3 lakh crore. Over the last five years, InvITs have mobilized nearly $15.8 billion, with total assets doubling from $37 billion in FY2020 to $73 billion in FY2025. The rapid rise underscores their growing role in India’s infrastructure financing ecosystem.
Global investors such as KKR, Brookfield, CPP Investments, and the Ontario Teachers’ Pension Plan dominate the InvIT landscape, highlighting strong international confidence in India’s infrastructure story. The road sector leads the way, accounting for more than half of all InvIT assets, followed by energy infrastructure (18.5%) and warehousing and logistics (11.1%).
Performance and Risk: A Balancing Act
According to Client Associates, InvITs have delivered average pre-tax returns of 10–12% and post-tax returns of 7–9%, outpacing most traditional fixed-income products. A large portion of these returns comes from regular cash distributions, making them attractive for investors seeking steady income.
However, the report also points to bouts of price volatility, especially during periods of market uncertainty, reflecting their hybrid nature, part debt, part equity. InvITs show an average volatility of 10.2%, lower than equities at 15.4%, but they still experience price swings that can affect total returns. In essence, they offer slightly lower returns than equities but with much greater stability.
Where InvITs Fit in a Portfolio
CA’s study classifies InvITs as part of the “alternative debt” category in a diversified portfolio. Their biggest appeal lies in their ability to generate consistent income while reducing overall portfolio risk due to their low correlation with the stock market.
With a correlation coefficient of just 0.42 to equities, InvITs behave more like utility investments, providing steady, contract-based revenues that are largely shielded from economic cycles. This makes them particularly valuable for investors looking to diversify or hedge against inflation, since many infrastructure contracts include inflation-linked pricing.
InvITs are best suited for income-focused investors, conservative savers seeking better yields than fixed deposits, and long-term investors who can tolerate moderate price volatility. They’re also an appealing entry point for those looking to participate in India’s ongoing infrastructure boom without directly owning physical assets.
Selectivity Matters: Not All InvITs Are Equal
The report cautions against indiscriminate investing. While InvITs present attractive opportunities, performance varies widely across trusts. Entry valuations, liquidity, and tax structure play crucial roles in determining final returns.
Of the 27 registered InvITs, only six are publicly listed and liquid enough for retail participation. Liquidity is a key constraint, as many private InvITs require special arrangements for buying or selling units.
Tax treatment also significantly affects returns. Typically, about 75% of distributions, comprising interest and dividends are taxable, while the remaining 25% (largely capital repayment) is tax-free. Investors in higher tax brackets need to account for this when evaluating post-tax yields.
Equally important is sponsor quality. Trusts backed by financially strong and credible sponsors tend to deliver better performance and inspire greater investor confidence.
Challenges and Growth Prospects
Retail participation in InvITs remains limited, representing just around 7% of total ownership. The majority of holdings are concentrated among promoters (47.9%), with institutional and foreign investors together accounting for roughly one-third of the market. The limited retail participation stems from low awareness, limited liquidity, and the perception that InvITs are complex products.
Despite these challenges, the growth outlook is bright. CA projects that InvITs could reach Rs. 21 lakh crore in AUM by 2030, a threefold rise from current levels. This expansion will be driven by India’s $4.5-trillion infrastructure investment target, the National Infrastructure Pipeline, and increasing corporate adoption of the InvIT model to unlock capital.
Policy Reforms Fueling Growth
Several regulatory and policy changes have boosted investor confidence. The 2024 tax reforms shortened the long-term capital gains holding period from 36 months to 12 months and cut the tax rate to 12.5%, improving investor returns. The minimum investment for privately listed InvITs was also reduced to Rs. 25 lakh, and conversion rules for private-to-public InvITs were simplified.
In a key move, the Securities and Exchange Board of India (SEBI) in September 2025 reclassified Real Estate Investment Trusts (REITs) as equity instruments for mutual fund investment while keeping InvITs in the hybrid category. The distinction reinforces InvITs’ nature as stable, income-generating vehicles closer to debt than equity.
InvITs have become a cornerstone of India’s infrastructure financing strategy. They offer predictable income, diversification, and inflation protection, qualities prized by both institutional and individual investors. Yet, as the Client Associates report reminds, disciplined selection remains essential. The future of InvITs looks promising, but success will depend on careful attention to liquidity, asset quality, and the strength of underlying sponsors.
India’s infrastructure story is just beginning and InvITs are shaping up to be one of its most powerful financial engines.
