SEBI Unlocks Global Capital Flows as It Seeks Input on REIT and InvIT Depository Receipts

SEBI Unlocks Global Capital Flows as It Seeks Input on REIT and InvIT Depository Receipts​

Securities and Exchange Board of India (SEBI) has issued a crucial Consultation Paper detailing proposed regulatory changes for the issuance of Depository Receipts (DRs) against units of Real Estate Investment Trusts (REITs) and Publicly Listed Infrastructure Investment Trusts (InvITs). This move is poised to significantly expand global investment avenues into Indian real estate and infrastructure assets.

The paper, released on August 04, 2026, invites comments from market participants regarding the proposed framework. These proposals are rooted in recommendations by SEBI’s Hybrid Securities Advisory Committee (HYSAC). The move aims to create a standardized pathway for foreign capital to invest in these vital investment vehicles through international markets.

Why Depository Receipts for REITs and InvITs?​

The underlying rationale for this initiative is the increasing need to attract sophisticated global investors into the Indian real estate and infrastructure sectors. Currently, units of REITs and InvITs are denominated in Indian Rupees (₹) and trade on domestic recognized stock exchanges.

A framework enabling DR issuance would allow these trusts to raise funds internationally within permissible jurisdictions. This mechanism offers a significant advantage as DRs enable trading in foreign currency on international exchanges, thereby boosting capital inflow into the sector.

Regulatory Background of Investment Vehicles​

REITs and InvITs are established as trusts under the Indian Trusts Act, 1882, and are registered with SEBI under their respective regulations (REIT Regulations and InvIT Regulations). These units represent a fractional beneficial interest in the underlying assets held by the trust.

The existing Depository Receipts Scheme, 2014, already permits certain individuals to invest in the underlying securities of these trusts. The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 ('NDI Rules'), confirm that foreign residents can invest in REIT and InvIT units via DRs issued by foreign depositories against eligible Indian securities.

Proposed Framework for International Listing​

The core proposal seeks to insert an enabling provision into the relevant trust regulations. Specifically, Regulation 14(12A) in the REIT Regulations and Regulation 14(4)(ma) in the InvIT Regulations are proposed changes.

The proposed language would state that "Depository Receipts may be issued against units of a REIT / Publicly Offered InvIT subject to compliance with these regulations." This formal recognition is needed as current trust regulations lack this specific enabling provision for DR issuance.

It must be noted, however, that the scope is carefully defined. The proposals are intended for REITs and publicly listed InvITs only. Privately Listed InvITs, which currently involve restrictions such as a trading lot size of ₹25 lakhs, will not be included in this specific regulatory framework.

Detailed DR Framework and Investor Guidance​

The detailed operational guidance for the issuance of these international instruments is expected to come via a SEBI Circular. This circular will specify the framework, drawing heavily from the existing Equity DR Framework outlined in SEBI Master Circular dated December 30, 2024.

The draft framework developed by SEBI is aligned with the established standards of the Equity DR Framework and includes necessary adjustments for the unique characteristics of REITs and Publicly Listed InvITs. These changes are documented in a comparative analysis to ensure market stability and clarity.

Timeline and Consultation Details​

SEBI has invited all market participants to review these proposals and submit comments. The submission deadline for the Consultation Paper is August 25, 2026. Stakeholders are encouraged to provide detailed feedback and supporting rationales on both the permission of DR issuance and the attached draft framework. Further instructions and technical contact details have been provided by SEBI for smooth submissions.