India’s infrastructure financing ecosystem is undergoing a major transformation, and Infrastructure Investment Trusts (InvITs) are at the center of this transformation. Initially designed as specialized instruments for institutional investors, InvITs have steadily evolved into reliable, transparent and efficient vehicles for domestic and global investors seeking stable, long-term returns. As India enters a new phase of infrastructure expansion, 2026 is set to be a defining year for InvITs, which could reshape the landscape of infrastructure financing and investment participation.

Below are five mega trends that will drive the next phase of evolution for this dynamic asset class.

1. Integration of public and private capital

A key theme for 2026 will be the increasing integration of public and private capital into the InvIT framework. Over the past few years, government-backed organizations such as National Highways Authority of India (NHAI) and Power Grid Corporation of India Limited (PGCIL) have successfully launched InvITs to monetize operational assets, setting strong precedents for transparency and efficiency in asset monetization.

The success of this model may encourage other public sector undertakings and state governments to explore InvITs as a means of unlocking value from mature infrastructure assets. In 2026, this convergence is expected to accelerate, with more public utilities and state authorities turning to InvITs to fund projects in roads, renewable energy, power transmission, gas pipelines and urban infrastructure.

At the same time, some privately managed InvITs expect to move from private placement to public listing, expanding their investor base and improving liquidity. This mix of public and private capital will not only bridge the infrastructure financing gap but also increase governance, investor confidence and market depth, making InvITs the cornerstone of India’s infrastructure funding model.

2. Expansion into new and emerging sectors

The initial wave of InvITs was largely concentrated in roads and power transmission, but the next growth phase will be marked by sectoral diversification. In 2026, InvITs are set to expand into areas such as renewable energy, digital infrastructure (including data centers and fiber optic networks), ports, airports and logistics hubs.

Urban infrastructure, particularly projects led by municipal bodies, is another area of ​​InvIT adoption. Revenue generating assets such as water supply networks, sewage treatment plants, metro systems and smart city projects present significant potential for monetization through structures such as InvIT.

This diversification will align InvITs with India’s broader sustainability and economic objectives. The growing global appetite for green and ESG-aligned investments will position InvITs as an attractive platform for investors seeking predictable cash flows with environmental and social impact. As a result, InvITs can emerge as a key tool in raising capital for India’s clean and inclusive infrastructure transformation.

3. Strengthening regulatory oversight and governance

The credibility of InvITs is anchored in SEBI’s robust regulatory framework, which has evolved to enhance disclosure, investor protection and transparency. By 2026, further refinements are expected to strengthen governance and streamline operations as InvITs expand in scale and complexity. This stronger oversight will promote smooth market functioning and attract greater participation from domestic and global investors through improved consistency and predictability across the sector.

4. Increasing participation of local institutional investors

Historically driven by foreign investors such as global pension and sovereign wealth funds, the InvIT market is now seeing a surge in domestic institutional participation. In 2026, allocations by insurance companies, pension funds and mutual funds are expected to increase, attracted by InvITs’ stable yield and predictable cash flows. Regulatory bodies like IRDAI and PFRDA may relax investment limits, while SEBI’s streamlined norms will support this shift. Growing retail awareness will further broaden participation, increase liquidity and strengthen market resilience.

5. Integration of technology, ESG and data-driven governance

By 2026, technology and sustainability will drive InvIT operations. Advanced analytics, digital compliance and AI monitoring will boost efficiency and transparency. Simultaneously, environmental, social and governance (ESG) principles will remain integral, with investors favoring assets that demonstrate measurable progress in carbon reduction, social impact and governance. Following India’s first sustainability-linked InvIT bond, green InvITs, ESG-linked financing and sustainability funds are expected to become mainstream, aligning InvITs with global sustainable finance norms.

The Road Ahead

With over ₹7 lakh crore of assets under management in roads, transmission, renewables, warehousing and telecom by 2025, InvITs have become critical to bridging India’s infrastructure funding gap. With several new listings expected in 2026, this figure will increase significantly. The next phase driven by public-private integration, diversification, strong regulation, domestic participation and tech-led transparency will position InvITs as key enablers of sustained, long-term growth, powering India’s infrastructure-led economic transformation in the coming years.

(The author is NS Venkatesh CEO, Bharat Invit Association. Views are his own.)