SEBI has announced that Real Estate Investment Trusts (REITs) will only be included in equity indices after a six-month waiting period—beginning July 1, 2026—ensuring a stable transition. From January 1, 2026, all investments by mutual funds and SIFs in REITs will be treated as equity, aligning with new regulatory classifications.
India’s capital markets regulator SEBI will implement two landmark reforms for REITs, the sector’s liquidity and index eligibility. First, SEBI is working to bring REITs into major equity market indices, but only after a six-month “glide path” staring July 1, 2026, giving markets and asset managers time to adjust portfolio, tracking and risk protocols.
Second, beginning January 1, 2026, any investments made by mutual funds and specialized investment funds (SIFs) into REITs will be reclassified and regarded as equity exposure rather than hybrid or corporate debt. This change aims to enhance index inclusion, attract passive and institutional flows, and standardize treatment across equity-centric mutual fund categories.
Sector leaders expect inclusion in indices to drive large‑scale ETF, index fund, and passive investor allocation to qualifying REITs, boosting depth, liquidity, and valuation. The transition also positions India’s REIT market closer to global norms, but will require robust market education for broader retail participation and risk awareness.
Key highlights
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REITs will be eligible for equity index inclusion after July 1, 2026, ensuring a minimum six‑month transition.
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Mutual funds and SIFs must classify all REIT investments as equity from January 1, 2026.
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Policy change aims to deepen liquidity, attract passive flows, and accelerate market development for India’s REIT sector.
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India’s REIT and InvIT market remains underpenetrated but has AUM of ₹9.25 trillion as of October 2025.
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Sector still awaits clarity on InvIT index eligibility and possible greenfield project access; more reforms expected.
Sources: SEBI statements and consultation papers; Financial Express; Economic Times; Hindustan Times; ICICI Direct market commentary; Moneycontrol; Upstox market news.