The Securities and Exchange Board of India (SEBI) has permitted Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to issue Depository Receipts (DRs), enabling these investment vehicles to access a wider pool of international investors. The move is aimed at attracting foreign capital into India’s real estate and infrastructure sectors and providing additional avenues for fundraising.
Under the new framework, REITs and InvITs can issue fresh units or facilitate the transfer of existing units held by unitholders for the purpose of issuing DRs. These foreign currency-denominated instruments will be issued by foreign depositories against securities deposited with domestic custodians in India.
According to two separate circulars issued by SEBI, the DRs will be listed on specified international exchanges operating within India’s International Financial Services Centre (IFSC). These include India International Exchange (India INX) and NSE International Exchange.
The framework was initially proposed in August 2026 and subsequently approved by SEBI’s board in September. It specifies eligibility conditions, issuance procedures, pricing requirements and compliance obligations for REITs, InvITs and other parties involved in the process.
Eligibility Conditions and Issuance Requirements
SEBI has prescribed eligibility criteria for REITs, InvITs, their managers, directors, promoters, partners and unitholders transferring units for DR issuance. These entities and individuals must not be debarred from accessing the capital markets, classified as wilful defaulters or identified as fugitive economic offenders.
Restrictions will also apply to individuals or entities that are promoters or directors of another company, REIT or InvIT that has been debarred by SEBI. However, these restrictions will not apply where an earlier debarment period has expired before the relevant offer document is filed.
The regulator has also clarified that DR holders and their beneficial owners must not be residents of India. The responsibility for ensuring compliance with this requirement will rest with the DR holders and their beneficial owners.
Under the prescribed process, REIT managers and InvIT investment managers must submit the initial offer document to SEBI and recognised stock exchanges through a merchant banker. SEBI will provide its comments, if any, within seven working days of receiving the document. Stock exchanges will decide on in-principle approval within 15 working days of receiving the application and the required documents.
Unitholder Approval and Public Holding Norms
Any fresh issue of DRs will require prior approval from unitholders, with at least 75% of the votes cast in favour of the proposal. However, this requirement will not apply when a REIT or InvIT undertakes an initial domestic offer and listing alongside a simultaneous DR issue on an international exchange.
A separate approval will also not be required for subsequent DR offerings within the overall limit previously approved by unitholders.
Where existing unitholders transfer their units for a DR listing, the respective REIT or InvIT must provide all existing unitholders an opportunity to tender their units. The manager or investment manager must also ensure compliance with minimum public unitholding requirements at the time of issuance. Units deposited with a domestic custodian for DR issuance will be treated as non-public unitholding for this calculation.
Pricing, Disclosure and Monitoring Requirements
SEBI has established pricing conditions to maintain consistency between domestic unit offerings and international DR issuances. In cases involving simultaneous listing in India and on an international exchange, the price of units issued or transferred for DRs cannot be lower than the applicable price for the corresponding domestic offering, preferential allotment or institutional placement.
The same pricing principle will apply to separate issuances or transfers of units for DR purposes.
The framework also requires REIT managers and InvIT investment managers to file disclosures made on international exchanges with recognised Indian stock exchanges within 24 hours. A merchant banker must be appointed to oversee regulatory compliance and submit a report to the board of the respective manager or investment manager.
Voting rights attached to underlying units, wherever applicable, will be exercised through the foreign depository based on instructions received from DR holders.
Domestic custodians will maintain records of DR issuance and cancellation transactions and report them to Indian depositories. Foreign depositories will be allowed to issue DRs only after the domestic custodian confirms receipt of the underlying units.
The new framework has come into immediate effect. By allowing REITs and InvITs to access international capital markets through Depository Receipts, SEBI has introduced another fundraising route for India’s real estate and infrastructure investment sectors, subject to prescribed investor eligibility, pricing and disclosure requirements.
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