India's InvIT Market Expands Rapidly But Retail Investors Remain Distant
India's infrastructure investment trust market continues its impressive growth trajectory. Assets under management have surged to approximately ₹6.28 trillion, demonstrating strong institutional interest. However, this expansion has largely bypassed the country's retail investor community, creating a significant participation gap.
The Public Listing Challenge
Only six of India's twenty-nine registered InvITs currently trade on public exchanges. This limited availability restricts access for ordinary investors. The remaining twenty-three trusts operate as private entities, catering primarily to sophisticated institutional players with deeper pockets and specialized knowledge.
Recent data reveals substantial growth in funds mobilized through these instruments. Collections jumped from ₹110 billion in fiscal 2020 to ₹1.38 trillion in fiscal 2025. Industry projections suggest this momentum will continue, with assets potentially reaching ₹21 trillion by 2030.
Regulatory Efforts Fall Short
The Securities and Exchange Board of India has implemented several measures to encourage broader participation. The regulator reduced the minimum investment threshold from ₹1 crore to ₹25 lakh for secondary market transactions. It also simplified conversion processes for private listed InvITs seeking public status.
Despite these regulatory adjustments, market response remains subdued. Experts point to multiple structural barriers preventing wider retail engagement with this asset class.
Key Barriers to Retail Participation
Several factors contribute to limited retail involvement in India's InvIT market:
- Valuation Complexity: Infrastructure assets present unique valuation challenges that complicate daily pricing requirements for many investment vehicles.
- Liquidity Concerns: Trading volumes remain concentrated in a handful of names, resulting in thin markets and wide bid-ask spreads that discourage smaller investors.
- Return Predictability: Infrastructure assets experience cyclical cash flow variations that can distort short-term returns, making them less attractive for retail portfolios.
- Perception Issues: Unlike tangible real estate, infrastructure projects feel abstract to many individual investors, with long concession periods affecting perceived value.
- Taxation Structure: Current tax treatment lacks the exemptions available for equity products, reducing comparative attractiveness.
Institutional Dominance Continues
Pension funds, mutual funds, and insurance companies have embraced InvITs as part of their investment strategies. These institutional players appreciate the predictable income streams generated by infrastructure assets like toll roads and power projects.
Bhavya Bagrecha of Bharat Value Fund notes that InvITs currently function primarily as institutional assets. Retail investors often find other asset classes more appealing for short to medium-term horizons, despite InvITs offering returns in the 12-14% range.
The Path Forward
Industry experts suggest several measures to boost retail participation:
- Improving disclosure consistency to enhance transparency
- Expanding research coverage to support informed decision-making
- Creating more accessible participation avenues with fewer administrative hurdles
- Further reducing investment ticket sizes to reach broader investor segments
- Addressing taxation concerns to improve comparative attractiveness
Vivek Rathi of Knight Frank India estimates retail participation currently represents just 5-10% of total InvIT assets under management. This indicates substantial room for growth if structural barriers can be effectively addressed.
The market regulator continues its efforts to democratize access to infrastructure investments. However, bridging the gap between institutional dominance and retail participation requires coordinated action from regulators, industry participants, and financial intermediaries.
