Infrastructure Investment Trusts : A Roadmap for Growth

The Planning Commission of India has projected an investment of US$ 1 trillion for the infrastructure sector during the 12th Five-Year Plan (2012-17), with 40 per cent of the funds coming from the country's private sector. India's focus on infrastructure since the turn of the millennium has helped make it the second fastest growing economy in the world. The country's constant growth gives investors, domestic and foreign, a tremendous opportunity for investment in its infrastructure sector.The Securities and Exchange Board of India (the “SEBI”) on July 17, 2014 came out with draft regulations for Infrastructure Investment Trusts (the “InvITs”) announced in the finance minister's budget speech on July 10, 2014 to provide easier financing options to developers of public works. Later on September 26, 2014, SEBI released the SEBI (Infrastructure Investment Trusts) Regulations, 2014. InvITs are a special type of investment vehicle which operate more like mutual funds but invest in infrastructure sector for returns. In this sector the income is usually generated through investments in building roads, bridges, ports, etc., and the returns from such investments are passed on to the investors in the InvITs.Usually InvITs' securities are traded on the bourses and investors can buy and sell those units like stocks. In India, SEBI, being the market regulator, is in the process of formulating rules for launching InvITs in India