Expert Committee Report on REITs and InvITs in GIFT IFSC: Key Recommendations, Regulatory Changes and Opportunities

The International Financial Services Centres Authority (IFSCA) has released the Report of the Expert Committee on the Development of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in GIFT IFSC, outlining a comprehensive roadmap to position GIFT IFSC as a globally competitive hub for real estate and infrastructure financing. The report presents a series of regulatory, taxation, inter-regulatory, and product innovation recommendations aimed at attracting long-term global capital while strengthening India’s infrastructure financing ecosystem.

With India’s infrastructure investment requirements expected to reach USD 4.5 trillion by 2040 and the real estate sector projected to grow to USD 5.8 trillion by 2047, the report recognises that innovative investment vehicles such as REITs and InvITs will play a critical role in mobilising domestic and international capital.

This article analyses the key recommendations of the Expert Committee, their potential impact on GIFT IFSC, and what they mean for investors, sponsors, developers, and fund managers.

Why Did IFSCA Constitute the Expert Committee?

Recognising GIFT IFSC’s potential to become a global gateway for investment into India’s real estate and infrastructure sectors, IFSCA constituted an Expert Committee in January 2024 under the Chairmanship of Shri Ananta Barua, Former Whole Time Member of SEBI.

The Committee included experts from:

• Real estate
• Infrastructure
• Investment banking
• Financial services
• Legal profession
• Consultancy
• Stock exchanges
• Regulatory policy

Its mandate included recommending measures relating to:

• Development of REITs and InvITs in IFSC
• Regulatory reforms
• Taxation reforms
• Innovative investment products
• Global competitiveness
• International capital mobilisation

Following extensive stakeholder consultations and global benchmarking studies, the Committee submitted its report to IFSCA.

Vision: Making GIFT IFSC a Global Investment Platform

The report seeks to transform GIFT IFSC into an international platform for financing real estate and infrastructure assets by attracting:

• Sovereign wealth funds
• Pension funds
• Insurance companies
• Institutional investors
• Foreign portfolio investors
• Long-term global capital providers

The Committee also recommends expanding the scope beyond India-focused investment structures by introducing opportunities for:

• Global REITs
• Global InvITs
• Mixed REITs
• Mixed InvITs

This broader investment universe could significantly improve cross-border capital flows through GIFT IFSC.

Key Recommendations of the Expert Committee

1. Product Innovation

The Committee proposes several innovative products to broaden the investment ecosystem.

Introduction of Mortgage REITs (mREITs)

One of the most significant recommendations is the introduction of Mortgage REITs (mREITs) within GIFT IFSC.

Unlike traditional REITs that own real estate assets, Mortgage REITs primarily invest in mortgage loans and mortgage-backed securities. This would:

• Create an alternative financing channel
• Improve liquidity in real estate finance
• Encourage securitisation markets
• Diversify investment opportunities

Green REITs and InvITs

The Committee recommends extending the existing anti-greenwashing framework applicable to ESG-labelled debt securities to REITs and InvITs that market themselves as “green.”

This would enhance investor confidence while promoting transparency in sustainable investment products.

Small and Medium REITs

Rather than immediately expanding Small and Medium REITs (SM REITs), the Committee suggests adopting a calibrated approach while monitoring:

• Domestic market developments
• Tokenisation of real-world assets
• Investor participation
• Market maturity

2. Regulatory Reforms

The Committee recommends strengthening the existing regulatory framework under the IFSCA (Fund Management) Regulations, 2025.

Key proposals include:

Recommendation	Purpose
Inducted Sponsors	Facilitate sponsor transitions
Re-Designated Sponsors	Improve operational flexibility
Self-Sponsored Investment Managers	Enhance governance structures
Fast Track Rights Issues	Simplify capital raising
Subordinate Units	Improve investment structuring
Investor Protection Fund	Strengthen investor confidence

These measures are expected to make IFSC REITs and InvITs more efficient and internationally competitive.

3. Inter-Regulatory Reforms

To eliminate regulatory bottlenecks, the Committee recommends several inter-regulatory reforms.

Exemption from Sectoral Caps

Investments made by IFSC REITs and InvITs into Indian entities should be exempt from:

• Sectoral investment caps
• Three-year lock-in requirements under the automatic route

Overseas Portfolio Investment (OPI) Relaxation

Indian sponsors of IFSC REITs and InvITs may be exempted from Overseas Portfolio Investment (OPI) limits, making it easier to establish IFSC investment structures.

Depositary Receipts and Dual Listing

The Committee also proposes enabling SEBI-registered REITs and InvITs to access GIFT IFSC stock exchanges through:

• Depositary receipts
• Dual listing
• Secondary listing mechanisms

These changes could significantly improve market liquidity and cross-border participation.

4. Taxation Recommendations

Tax competitiveness remains one of the Committee’s major focus areas.

The report recommends:

Tax Parity

Creating tax neutrality between:

• IFSCA-registered REITs
• SEBI-registered REITs

through amendments to the Income Tax Act, 2025.

Exemption for Foreign-Sourced Income

Foreign-sourced income earned by non-resident unitholders should be exempt from taxation, making IFSC investment structures more attractive to overseas investors.

Globally Competitive Tax Framework

The Committee also recommends developing an internationally competitive taxation regime capable of attracting:

• Sovereign wealth funds
• Pension funds
• Insurance companies
• Long-term institutional investors

Why These Recommendations Matter

If implemented, the recommendations could significantly reshape the investment landscape within GIFT IFSC.

Potential benefits include:

• Greater foreign capital inflows
• Increased monetisation of infrastructure assets
• Expanded financing options for developers
• Improved liquidity
• More sophisticated investment products
• Enhanced investor protection
• Increased competitiveness with global financial centres such as Singapore and Dubai.

Implications for Stakeholders

For Real Estate Developers

Developers may benefit from:

• Improved asset monetisation
• Additional financing channels
• Lower cost of capital
• Greater institutional participation

For Infrastructure Companies

Infrastructure owners may gain access to:

• Global investors
• Long-term financing
• Flexible capital raising mechanisms

For Global Investors

The proposed framework could offer:

• Tax-efficient investment structures
• Greater investment flexibility
• Diversified exposure to Indian infrastructure and real estate assets

For Fund Managers

Fund managers may benefit from:

• Innovative product offerings
• Streamlined regulatory processes
• Expanded fundraising opportunities
• International investor participation

What Happens Next?

IFSCA has stated that it will examine the recommendations in consultation with relevant stakeholders before considering the necessary:

• Policy measures
• Regulatory amendments
• Legislative changes

Accordingly, the recommendations are not yet effective law but represent the likely direction of future regulatory reforms for REITs and InvITs in GIFT IFSC.

Conclusion

The Expert Committee’s report marks an important milestone in the evolution of GIFT IFSC as an international financial centre. By recommending product innovation, regulatory reforms, tax rationalisation, and inter-regulatory coordination, the report lays the groundwork for a more globally competitive ecosystem for REITs and InvITs.

If implemented, these recommendations could strengthen GIFT IFSC’s position as a preferred destination for global capital while supporting India’s long-term infrastructure and real estate financing requirements. Market participants should closely monitor IFSCA’s next steps, as the proposed reforms have the potential to significantly influence future investment structures within the IFSC ecosystem.