SEBI opens depository-receipt route for property and infrastructure trusts
Where it stands
SEBI has issued rules allowing eligible Indian property and infrastructure investment trusts to reach foreign investors through depository receipts. Its two circulars took effect on 2 November 2026. The receipts can be listed on India International Exchange and NSE International Exchange in India’s International Financial Services Centre. A trust divides investors’ interests into units. Under this route, those units are held by a domestic custodian. A foreign depository then issues foreign-currency receipts backed by the units. An eligible overseas investor can hold the receipt instead of directly holding the underlying unit in the domestic market. There are two different ways to supply those units. A trust can issue new units, creating a route to raise money. Existing unitholders can also transfer their units into the arrangement. In the second case, selling an existing holding is different from bringing fresh money into the trust. Fresh receipt offerings generally need support from at least 75% of votes cast by unitholders, subject to specified exceptions. Receipt holders and their beneficial owners must be non-residents. Managers must also follow pricing, disclosure and custody requirements before an offering can proceed.
Background
Large property and infrastructure assets need substantial funding. A Real Estate Investment Trust, or REIT, pools investors’ money in real estate assets. An Infrastructure Investment Trust, or InvIT, uses a similar trust structure for infrastructure assets. Investors hold units representing an interest in the trust. Depository receipts provide another way to connect investors with such units. The receipt is backed by units held in custody, so the connection depends on accurate records. The foreign depository cannot issue receipts until the domestic custodian confirms that it has received the underlying units. SEBI’s circulars turn the permission for receipts on trust units into operating rules. They set out who may participate, where the receipts may be listed, and the duties of the intermediaries. The specified exchanges are in the International Financial Services Centre at GIFT City in Gujarat. Existing unitholders remain important because an offering can affect their interests. Voting approval and pricing rules give them protections within the process. A fresh listing may use existing units. In that case, all existing unitholders must have an opportunity to offer their units.
How it developed
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2 November 2026How it started
Two frameworks set the conditions for receipt offerings
SEBI issued separate frameworks for REITs and InvITs, both with immediate effect. New offerings generally require at least 75% of votes cast in favour. Exceptions cover specified simultaneous initial listings and later offerings within an already approved overall limit. The rules also protect the link between receipts and units. Custodians must confirm receipt of the units, and voting instructions pass through the foreign depository. Pricing must meet the applicable domestic-issue floor, while international-exchange disclosures must also reach recognised Indian exchanges within 24 hours.
Why it matters for UPSC
For GS3, explain how investment trusts connect long-term assets with investors. Trace the units, custodian, foreign depository and receipts in order. Distinguish raising money through new units from transferring an existing investor’s holding.
Key terms
Sources (3)
- SEBI · official · Framework for Issuance of Depository Receipts on Units of REITs4 Nov, 12:55 pm
- Moneycontrol · SEBI allows REIT and InvIT depository receipts on GIFT City exchanges4 Nov, 12:55 pm
- LiveLaw · SEBI frameworks for foreign investment through depository receipts4 Nov, 12:55 pm