Want to invest in India’s infra boom? Here’s all you need to know about InvITs

An InvIT is used by developers to monetise their finished projects to raise money from investors for new ones.

FPJ Web DeskUpdated: Tuesday, September 20, 2022, 08:17 PM IST
article-image
Status of infrastructure industry needs to be given to realty sector in order for it to raise funds from financial institutions/Representative image | proptiger

India’s infrastructure sector is set to register robust growth on the back of a $1.4 trillion investment set aside by the government for 2019 to 2023. The National Infrastructure Pipeline (NIP) has been expanded to cover almost 10,000 new projects, of which 42 per cent are already being implemented. The sector as a whole is expected to grow at a rate of 7 per cent between 2022 and 2027.

Major corporations are turning their attention towards India’s infrastructure projects, since they are offering high return on investment. It only makes sense to benefit from India’s infrastructure boom by becoming a stakeholder. But what’s the safe and advisable way to enter the sector?

Infrastructure Investment Trusts, also known as InvITs are investment vehicles which are like mutual funds which only include roads, warehouses, power plants and pipelines as assets. Governed by SEBI, 80 per cent of assets in InvITs must be completed projects which are already generating revenues, to ensure stable yearly payouts. They are used by developers to monetise projects they have already built, to raise capital from investors for future projects.

Standing on the foundation of established assets which promise regular, long-term returns, InvITs are a secure and lucrative investment. One can earn returns of up to eight to 10 per cent, while diversifying investments within the same pool. Currently NHAI, which achieved record construction speed last year, is trying to raise Rs 10,000 crore via InvITs, paving the way for investors to zoom ahead on India’s expanding highways.

Income generated through power projects is more stable as compared to toll collected from highways, which makes InvITs for those more preferable. Make sure that the business behind the project doesn’t run into credit risks that can affect cash flow, which is why investing in government projects is a better option.

(To receive our E-paper on whatsapp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

RECENT STORIES

Indian Oil keeps prices of petrol, diesel unchanged in Delhi since Thursday; check rates in other...

Indian Oil keeps prices of petrol, diesel unchanged in Delhi since Thursday; check rates in other...

Nervousness in global financial markets but Indian economy continues to be resilient: RBI chief...

Nervousness in global financial markets but Indian economy continues to be resilient: RBI chief...

Opening bell: Sensex, Nifty fall in early trade ahead of RBI monetary policy decision

Opening bell: Sensex, Nifty fall in early trade ahead of RBI monetary policy decision

Rupee rises 24 paise to 81.49 against US dollar in early trade

Rupee rises 24 paise to 81.49 against US dollar in early trade

RBI hikes benchmark lending rate by 50 basis points for 4th time in a row to rein in inflation...

RBI hikes benchmark lending rate by 50 basis points for 4th time in a row to rein in inflation...