India’s InvIT Market is Expected to Boom—Where Are the Retail Investors?

India's Infrastructure Investment Trust (InvIT) market is on the cusp of significant expansion, projected to reach ₹21 lakh crore (USD 258 billion) by 2030. This growth is fueled by the country's massive infrastructure investment needs, government initiatives such as the National Infrastructure Pipeline (NIP), and increasing participation from institutional investors. InvITs are investment vehicles that pool funds from investors to own and manage income-generating infrastructure assets like roads, power transmission lines, and telecom towers. They offer investors a share of the revenue generated from these assets, providing a steady income stream.

Despite the promising outlook and potential for stable returns, retail investor participation in the InvIT market remains limited. While institutional investors, including global giants like KKR and Brookfield, dominate the ownership landscape, retail investors hold only a small fraction of the total assets. This raises the question: why aren't more retail investors taking advantage of this booming market?

Several factors contribute to the low retail penetration in India's InvIT market. One significant barrier has been the high minimum investment amounts required to participate in privately placed InvITs. Previously, these thresholds could range from ₹1 crore to ₹25 crore, effectively excluding most individual investors. However, in September 2025, SEBI reduced the minimum allotment size for privately placed InvITs to ₹25 lakh, aiming to improve market accessibility for affluent individuals and family offices. While this reduction is a step in the right direction, it still remains a significant amount for many retail investors.

Another challenge is the complexity of InvITs and a lack of awareness among retail investors. Understanding the underlying infrastructure assets, their revenue models, and the regulatory landscape can be daunting for those unfamiliar with these investment vehicles. Moreover, InvITs are often compared to Real Estate Investment Trusts (REITs), which are generally considered easier to understand due to the tangible nature of real estate assets.

Liquidity concerns also play a role in deterring retail participation. Compared to equities, InvITs can have lower liquidity, making it more difficult for investors to quickly buy or sell their units. This can be a concern for retail investors who may need to access their funds more readily.

Despite these challenges, InvITs offer several advantages that could attract more retail investors. They provide relatively stable income, with pre-tax returns of 10-12% and post-tax yields of 7-9%, often outperforming traditional fixed-income instruments. The revenues generated by InvITs are often linked to inflation, providing a hedge against rising prices. Furthermore, InvITs have a low correlation with equity markets, offering diversification benefits to a portfolio.

To encourage greater retail participation in the InvIT market, several measures can be taken. Increased investor awareness and education programs are crucial to demystify InvITs and highlight their benefits. Simplifying the structure of InvITs and improving transparency can also make them more appealing to retail investors. Further reduction in the minimum investment amounts and improved liquidity in the secondary market would also help to broaden participation.

SEBI has been actively promoting InvITs and easing regulations to attract a wider range of investors. These efforts include reducing the minimum investment limits, clarifying the classification of public unitholders, and allowing holding companies to offset negative cash flows. The regulator is also pushing for more InvITs to go public, which could improve liquidity and price discovery.

The growth of India's InvIT market presents a significant opportunity for retail investors to participate in the country's infrastructure development and earn stable returns. By addressing the challenges and implementing the right measures, the InvIT market can unlock its full potential and attract a wider base of retail investors, contributing to India's economic growth.