Budget 2026: A fresh vote of confidence for REITs and InvITs

On January 15, 2026, Raajmarg Infra Investment Trust, a public InvIT backed by the NHAI, filed its draft offer document with SEBI for a proposed initial public offering. Once listed, the InvIT is poised to mark a milestone for the Government of India in its efforts to enhance public participation in the growth of infrastructure assets in India. This was by no means the Government’s first foray into asset monetisation through the InvIT route - past capital raising transactions involving Government-owned transmission and road assets (including by NHAI through its privately-listed InvIT) have proven the potential of this route time and again. 

In many ways, the budget announcement on February 1, 2026, specifically the proposal for creation of dedicated REITs for Central Public Service Enterprises (CPSEs), marks a significant leap in this direction. 

Limitless potential

Despite the limited number of REIT listings in India, the transformation of the commercial and retail real estate landscape on account of REITs has been remarkable. Even prior to the Budget announcement, the sentiment across the industry and investors has been overwhelmingly positive, with some experts pegging the growth opportunity for REITs in India in excess of approximately five times its current size in the long term, based on a sample size of just the top seven cities in India. 

Adding CPSEs to the mix has the potential of expanding this opportunity exponentially.

CPSEs, for context, are companies in which the Central Government, either directly or indirectly, is a majority shareholder. As of January 31, 2026, there are a total 448 CPSEs (including subsidiaries of CPSEs). However, of the operational CPSEs, only 73 are listed. In some ways, this reflects the work that has to be undertaken by market participants in bridging this ‘go to market’ knowledge gap that exists and which if actioned effectively, could result in  many large  and  profitable platforms being thrown open to investor participation.

Some of the prominent CPSEs which have the capability of being frontrunners in the proposed REIT-based monetisation model include the railways, port trusts, telecom exchanges and the NBCC, amongst others. Unlike traditional commercial real estate-focused REITs in India, where assets are concentrated in major urban centres and tier-1 cities, CPSE-owned and operated assets will benefit from their unparalleled geographical outreach, and enable investors to be active participants in the vision of ‘Viksit Bharat’, through the development, modernisation and evolution of core national infrastructure.   

Challenges ahead

While the Budget proposal and the sheer scale of the opportunity is full of promise, an endeavour of this nature and size is bound to come with its own unique set of challenges. 

First, the chasm that exists today between the statement of intent in the Budget proposal, and the knowledge of the REIT and InvIT product in the CPSE ecosystem. SEBI, the Indian REITs Association (IRA) and the Bharat InvITs Association (BIA) will have to continue with their  concerted efforts on this front. 

Second, corporatisation of existing holdings. The creation of special purpose vehicles, clean-up of holding structures based on strict eligibility requirements, and creation of governance frameworks are all fundamental building blocks for any REIT or InvIT, but will need extra focus for CPSEs. 

Third, the eligibility of asset classes to undertake REITs v InvITs will need to be examined on a case-by-case basis to make them ‘market ready’ ’. 

Fourth, asset management and project management will need to evolve to reach the standard of sophistication, quality and organisation that is expected of REITs and InvITs by investors, especially global institutional investors. 

Fifth, CPSEs will need to revamp their internal controls, record-keeping and information-dissemination systems to bring them at par with their corporate, listed counterparts. The extent of data, peer comparisons and recency will all need to keep step with national and global players in similar spaces.    

Needless to add, CPSEs will need to actively engage with the IRA, BIA, SEBI, the hon’ble ministries and practice-area experts to truly give wings to the idea. 

Sustained commitment to REITs and InvITs

The Budget proposal has several other takeaways which underscore the increasing significance of public infrastructure, financing instruments such as REITs and InvITs, and institutions such as NIIF and NABFID. The allocation of public capex has been increased to Rs. 12.2 lakh crore (from Rs. 11.2 lakh crore the previous year), an Infrastructure Risk Guarantee Fund, and a slew of new infrastructure developments have been proposed. The likely boost to data centre investments in India pursuant to the tax holiday and safe harbour proposed in the Budget deserves a special mention, since it will create ripple effects across the ecosystem and potentially lead to the creation of a new asset class that is inherently ripe for monetisation through the REIT and InvIT route, considering the success of data centre REITs globally.  

With this legislative intent, and a proactive regulator that has been putting sustained efforts in the growth and widespread acceptance of the products, all arrows are pointing in the right direction for REITs and InvITs in India.

(The authors are Partners with Shardul Amarchand Mangaldas & Co. Views are personal. )