SEBI has released a consultation paper to allow the issuance of Depository Receipts for REITs and listed InvITs. This proposed framework aims to simplify foreign investment by enabling trading in foreign currencies on international exchanges. The regulator has invited public comments on this plan until August 25, 2026.
The Securities and Exchange Board of India (SEBI) has introduced a proposal to create a regulatory framework for Depository Receipts (DRs) linked to Real Estate Investment Trusts (REITs) and publicly listed Infrastructure Investment Trusts (InvITs). This move is designed to make it easier for global investors to gain exposure to India’s infrastructure and commercial real estate markets.
How the New Framework Works
Currently, units of REITs and InvITs are traded in Indian Rupees solely on domestic exchanges. Under the proposed system, these trusts would be allowed to issue DRs in specific overseas jurisdictions. This structure would enable foreign investors to buy and sell these units in foreign currencies on international stock exchanges. By providing a familiar trading mechanism for international participants, the regulator intends to remove some of the friction associated with direct cross-border investments in Indian trusts.
SEBI has clarified that this new path will be open only to publicly listed InvITs. Privately placed InvITs are excluded from this framework, maintaining a focus on instruments that already have established public trading history and disclosure standards.
Impact on Foreign Capital Inflow
Foreign investors are already permitted to invest in Indian REITs and InvITs under current Reserve Bank of India (RBI) and government guidelines. However, the current process often requires navigating specific domestic procedures. By creating a dedicated pathway for DR issuance, SEBI aims to provide a more streamlined entry point. The ability to trade in foreign currency is expected to appeal to international institutional investors who prefer managing their portfolios without constant currency conversion hurdles.
Important Dates and Monitorables
This proposal is currently in the consultation stage, meaning the final rules are subject to change based on industry feedback. The regulator has set a deadline of August 25, 2026, for the public to submit comments and suggestions on this framework.
For investors, the key monitorable will be the final notification of the regulations, which will detail the specific international jurisdictions allowed and the compliance requirements for trusts opting to issue DRs. While this could theoretically increase liquidity and the investor base for REITs and InvITs, the actual impact will depend on the level of interest from overseas markets and how many trusts choose to utilize this new route to raise capital.