Securities and Exchange Board of India (SEBI) is considering including Real Estate Investment Trusts (REITs) in key indices, according to Chairman Tuhin Kanta Pandey. This move could broaden investor participation, boost liquidity, and deepen the REIT market. Pandey emphasized that investor protection remains a non-negotiable priority as the market evolves.
The proposal to reclassify REITs as equity instruments is a major step towards aligning Indian market structures with global standards. If approved, REITs could be included in equity indices such as the Nifty 500 and Nifty MidCap 150. Several REITs, including Embassy REIT and Knowledge Realty, are potential candidates for inclusion. The reclassification is expected to improve price discovery and potentially lead to valuation re-rating for REITs.
This reclassification allows institutional investors to treat REITs as part of their core equity allocation, which could increase investment flows into the sector. SEBI is also suggesting that mutual fund equity schemes be allowed to raise their investment cap in REITs and Infrastructure Investment Trusts (InvITs) from 10% to 20%. Debt schemes will continue to have a 10% limit to maintain risk safeguards for fixed-income portfolios.
Industry experts have expressed strong support for SEBI's decision to classify REITs as equity instruments. The Indian REITs Association (IRA) called it a progressive step that aligns with global best practices. REITs share characteristics of equities, such as higher liquidity and closer alignment with global market practices.
SEBI's move is expected to unlock deeper pools of capital for the real estate sector. Developers will increasingly build assets with the intention to list them under REIT/InvIT structures, which improves project discipline, tenant quality, and overall transparency. For infrastructure, InvITs provide a consistent and predictable way to fund long-gestation projects, fitting well with India's growing infrastructure ambitions. This reform lays the foundation for long-term retail and institutional capital to support India's urbanization and infrastructure vision.
In related news, SEBI is also considering introducing a dedicated delisting framework for Public Sector Undertakings (PSUs) where the government holds 90% or more. SEBI is reviewing amendments to its 2021 Share-Based Employee Benefits and Sweat Equity Regulations to permit startup promoters to hold or exercise ESOPs issued up to one year prior to their IPO.
SEBI Chairman Tuhin Kanta Pandey has emphasized the growing confidence of Indian investors in the country's capital markets, noting a significant increase in participation. As of October 2025, India has nearly 13.6 crore investors holding more than 21 crore Demat accounts. Approximately one lakh new Demat accounts are being opened every day. Pandey also highlighted the challenges associated with this growth, stressing the need for heightened awareness and financial literacy. While 63% of households in India are aware of securities market products, only 9.5% are actually investing in them. SEBI has rolled out several initiatives aimed at investor protection and awareness to tackle these concerns. A recent SEBI survey showed that 22% of respondents are considering entering the markets within the next 12 months.
Pandey underscored that investor protection and market integrity must move beyond rhetoric to become real-world action, where investors receive accurate information, assets are held securely, and governance remains strong. He outlined the responsibilities of intermediaries in strengthening investor confidence and market stability. SEBI launched the 'Sebi Check' tool on October 1 to aid investors in guarding themselves against possible scams.
