In a landmark announcement on November 21, 2025, the Securities and Exchange Board of India (SEBI) revealed that Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) will soon be included in major stock market indices. The regulator plans to do this gradually, following a “calibrated glide path” to ensure a smooth transition. For retail investors exploring this evolving space, consulting a SEBI registered stock trading advisor can offer added clarity and risk-managed guidance.
This move has huge implications. It is set to change the way Indian investors participate in the real estate and infrastructure sectors—and marks a major leap for India’s alternative investment ecosystem.
REITs and InvITs: The Basics Made Simple
At their core, REITs and InvITs allow ordinary investors to own a slice of rent-producing real estate or infrastructure projects—without buying the assets directly.
REITs focus on commercial real estate: offices, malls, corporate parks, and other completed, income-generating properties. They must keep at least 80% of their assets in completed buildings and distribute at least 90% of their income to investors.
InvITs do something similar for infrastructure. They invest in assets such as roads, power transmission lines, telecom networks, or renewable energy projects—projects that generate steady cash flows over long periods.
Together, REITs and InvITs have become serious players in India, with a combined AUM of about ₹9.25 trillion as of October 2025.
The Big Announcement and Why It Matters
SEBI Chairperson Tuhin Kanta Pandey announced at the National Conclave on REITs and InvITs that the regulator is working closely with index providers to include REITs in equity indices. The process will be gradual, but the direction is clear.
This matters because once REITs enter indices, passive funds—such as index funds and ETFs—will automatically allocate money to them. That means thousands of crores of passive capital will start flowing into REITs without any active decision-making required.
For a market where retail participation in REITs is still only about 1%, this can be nothing short of a liquidity revolution.
Higher liquidity means smoother price discovery, more trading activity, and greater comfort for large institutional investors who may have previously hesitated because these instruments didn’t trade enough.
Executives in the REIT space are calling this a watershed moment. Preeti Chheda, CFO of Mindspace Business Parks REIT, said index inclusion would significantly increase access to passive capital—and strengthen liquidity.
SEBI’s Earlier Reforms Set the Stage
This move didn’t happen out of the blue. In September 2025, SEBI reclassified REITs from “hybrid” instruments to “equity.”
This single change unlocked two big advantages:
Mutual funds can now treat REITs as equity investments, making it easier to include them in portfolios.
REITs are now eligible for inclusion in equity indices, something that wasn’t possible earlier.
Globally, REITs are treated as equity, so India’s reclassification also aligns domestic markets with international standards.
A Growing Market With Massive Potential
While India’s REIT and InvIT market is already large, the growth potential is immense. Knight Frank projects the market to nearly double from ₹10.4 trillion in 2025 to almost ₹20 trillion by 2030.
India has the world’s fourth-largest office market, with over 1 billion square feet of commercial real estate. Yet REITs currently own just about 15% of this. That leaves huge room for expansion.
Retail-focused REITs are also just beginning. Only one of the five listed REITs focuses on retail properties today. Analysts expect several new retail REITs to launch in the next few years, with the segment potentially reaching ₹60,000–₹80,000 crore by 2030.
And the asset classes are diversifying. Future REITs may include industrial parks, data centers, and hotel properties—broadening investment options even more.
Reforms That Support the REIT Ecosystem
SEBI is working on a range of measures to help REITs and InvITs move into the mainstream. The regulator is examining whether liquid mutual funds should be allowed to invest in them, which could channel huge pools of money into the sector.
SEBI is also coordinating with IRDAI, PFRDA, and EPFO to expand the participation of insurance companies, pension funds, and provident funds.
Capital-raising norms are being simplified, making IPOs, rights issues, and QIPs easier for REITs. And the category of “strategic investors” has been expanded to include pension funds, insurance companies, NBFCs, and even family trusts—introducing long-term, stable capital into the market.
Why SEBI Is Pushing This Now
India needs massive infrastructure investment—over ₹700 trillion by 2047, according to the National Infrastructure Pipeline. REITs and InvITs serve as a bridge between large-scale projects and household savings.
With index inclusion, SEBI is not just making REITs more popular. It is making them a core part of India’s capital markets—critical for funding roads, power grids, data centers, airports, and commercial real estate.
Investor Protection Remains Key
Even as SEBI promotes REITs aggressively, the regulator has emphasized that investor protection will not be compromised. Disclosure requirements have been strengthened, governance norms tightened, and investor education efforts broadened across multiple languages.
This aims to maintain trust as more retail money flows into these instruments.
Which Indices May Include REITs?
SEBI has not specified the exact indices yet, but market experts believe REITs may first appear in mid-cap indices such as the Nifty Smallcap 100. Another possibility is a revamped or expanded Nifty Real Estate index.
India’s listed REITs, with market caps between ₹21,000 crore and ₹52,000 crore, fit well into these segments.
The Bottom Line
SEBI’s decision to include REITs in major market indices represents a defining shift in India’s financial landscape. It brings REITs into the mainstream, attracts automatic passive inflows, boosts liquidity, and strengthens the connection between capital markets and real assets.
For investors seeking to benefit from these opportunities, short term stock trading advisory services can help navigate the initial transition period as REITs are gradually added to indices.
The transition will be gradual—but the direction is unmistakable. REITs are moving from the sidelines to the center of India’s capital markets.
