Infrastructure sector needs more institutional investments: Sebi chief

Diverse pool of participants will help improve liquidity in infra securities, says Tuhin Kanta Pandey

The investor base in infrastructure must be widened by bringing in mutual funds, pension funds, and retail players, said Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (Sebi), on Thursday.

 

A stronger and more diverse pool of participants would help improve liquidity in infrastructure securities, he said. “Our investor base is still narrow. Institutional investors dominate, while retail and foreign investors are cautious. Thin secondary market trading means liquidity is limited, which further discourages participation.”

 

Speaking at the NaBFID Annual Infrastructure Conclave in Mumbai, he stressed the need to speed up asset monetisation in roads, railways, ports, airports, energy, petroleum and gas, and logistics. 

“State governments, barring a few, are yet to crystalise asset monetisation plans to provide further boost to infrastructure creation. This gap needs to be addressed. A variety of products and models exist for such monetisation such as InvITs, REITs, various forms of public private partnerships, and securitization,” he said, referring to real estate investment trusts and infrastructure investment trusts.

 

Pandey noted that funds raised through municipal bonds, REITs, and InvITs have increased but are small compared to the “trillions of rupees” required for India’s development.

 

Urban local bodies have since 2017 raised around Rs 3,134 crore through 21 municipal bond issuances, but many continue to face challenges such as weak balance sheets and delayed clearances.

 

Pandey warned against over-reliance on banks and government budgets, saying it could create concentration risks. In contrast, market-based instruments such as corporate bonds, InvITs, REITs, and municipal bonds can distribute risk across multiple participants.

 

As many as five REITs and 23 InvITs registered with Sebi have mobilised Rs 1.5 trillion over the last five years, with assets under management reaching Rs 8.7 trillion at the end of FY25. Infrastructure-focused Category-I Alternative Investment Funds have invested over Rs 7,500 crore as of June 2025.

 

Pandey also highlighted recent regulatory steps aimed at improving ease of doing business, including the move to classify REITs as ‘equity’ and the expansion of the definition of ‘strategic investor’ for both REITs and InvITs.