Paving the Path to Passive Income: Demystifying InvITs and My Infra Investment Playbook

Written By Shivam Sood

Hey, infra enthusiasts and portfolio tinkerers! If you're like me—slicing through surgeries by day and dissecting market charts by night—you get the pull of India's infrastructure boom. Roads zipping across states, power grids lighting up villages, towers connecting the unconnected... it's the backbone of our $5 trillion dream. But who has time to build a highway? Enter Infrastructure Investment Trusts (InvITs)—the unsung heroes turning tolls and tariffs into your dividend drip. I've been allocating to these since 2022, blending them into my equity-heavy mix for that steady yield kick. Today, we're unpacking what they are, how they hum, SEBI's guardrails, the public vs. private showdown, India's red-hot scene (hello, 25 trusts and counting), your entry ramp, the wins and pitfalls, and my gritty, real-talk experience. Let's toll this highway—no detours, just dividends.

What the Heck is an InvIT?

Think of an InvIT as a mutual fund on steroids, but for bridges, not bonds.

Infrastructure Investment Trusts (InvITs) are developer-backed trusts that scoop up, run, and pump cash into ready-to-roll (or half-built) infra assets—think highways humming with traffic, power lines buzzing, telecom towers spiking the skyline, or fiber cables threading cities.

Sponsored by big players like IRB or Power Grid, they pool our rupees to own these cash cows, then pipe out the income as dividends.

The endgame? Supercharge India’s infra spend—$75 billion from the Centre alone in FY25, up 6x from a decade ago. For us? A front-row seat to economic growth without the EPC headaches.

SEBI mandates a 90% payout, so expect 8–10% yields, taxed smartly. It’s like owning a slice of the Golden Quadrilateral—minus the pothole calls.

How Does an InvIT Actually Grind Gears?

InvITs aren’t magic; they’re a well-oiled machine. Here’s the assembly line:

  • Sponsor Steps Up:
    An infra developer like Macrotech or NHAI plays godfather, scouting income-spewing assets (toll roads, anyone?).

  • Trust Assembly:
    They spin up a Special Purpose Vehicle (SPV) under the Indian Trusts Act, 1882—your InvIT is born, holding assets directly or via a 50%+ stake in an SPV.

  • Trustee Takes the Wheel:
    Appointed by the sponsor, this independent watchdog grabs asset control. Sponsor? Hands off—no meddling.

  • Manager Duo:
    Trustee hires an Investment Manager (growth guru, chasing returns) and a Project Manager (ops boss, finishing under-construction gigs).

  • IPO or Private Party:
    Register with SEBI, list on NSE/BSE for public moolah, or sell units privately. Cash floods in; assets expand.

Rents and tolls roll in quarterly, and 90%+ hits your pocket as dividends. Pros handle the levers; you collect the tolls.

Pro tip: Keep debt ratios under 70% for a smooth ride.

SEBI’s Rulebook: Keeping InvITs Honest

SEBI birthed InvITs (along with REITs) in 2014 as hybrid funds. As of early 2025, there are 25 registered InvITs.

The rulebook is ironclad:

  • Asset Split:
    80% must be in income-generating projects (live roads, grids).
    20% can go into under-construction assets or SEBI-approved stocks, bonds, or money markets.

  • Payout Power:
    90% of net distributable cash must be paid to unitholders, at least twice a year.

  • Recent Tweaks (April 2025):
    Easier ecosystem investments (suppliers, liquid mutual funds) for the 20% bucket.

Quarterly disclosures, independent valuations—this isn’t the Wild West.

Why Bother for the InvIT Itself?

InvITs aren’t just investor candy—sponsors benefit too.

  • Debt Detox:
    Sponsors monetize assets, raise ₹2,500 crore (Bharat Highways style), wipe loans, and fund new projects.

  • Tax Turbo:
    Pass-through status avoids corporate taxation, boosting post-tax cash flows.

End result? Sponsors scale without balance-sheet bloat, and India’s $2.2 trillion infra pipeline gets greased.

Public vs. Private InvITs: The Liquidity Lowdown

Public ones trade like stocks; private ones are VIP-lounge only.

Public InvITs

  • Access: Available to all investors via Demat accounts; ₹10,000–₹15,000 entry

  • Liquidity: Traded daily on NSE/BSE

  • Regulation: Full SEBI oversight with public disclosures

  • Returns: 8–10% yields plus market-linked appreciation

  • Fees: Only brokerage charges

Private InvITs

  • Access: HNIs and institutions only; ₹25 lakh+ minimum

  • Liquidity: Lock-ins; exits at the manager’s discretion

  • Regulation: Lighter oversight, less transparency

  • Returns: Higher potential, but capital stays locked

  • Fees: 1–2% management fees

Verdict:
Public InvITs for us mortals—flexible and liquid.
Private InvITs for whales chasing chunky yields.

I stick with public InvITs—easy to manage between clinic hours.

India’s InvIT Ignition: 25 Trusts, $73B AUM, and a 2030 Moonshot

India’s InvIT engine is revving:

  • AUM: $73 billion (₹6 lakh crore) in FY25

  • Registered InvITs: 25 (5 public, 20 private)

  • Capital raised since FY20: ₹1.29 lakh crore

  • Market cap of listed InvITs: ₹2.4 lakh crore

  • FY25 distributions: ₹24,267 crore

Public InvIT Stars (NSE/BSE-listed)

  • Bharat Highways InvIT

  • Cube Highways Trust

  • India Grid Trust (IndiGrid)

  • India Infrastructure Trust

  • IRB InvIT Fund

  • National Highways Infra Trust

  • NDR InvIT Trust

  • Nxt-Infra Trust

  • Powergrid Infrastructure Investment Trust

By 2030, AUM is projected to hit $258 billion (₹21 lakh crore). Roads dominate (40%), power and telecom follow. Retail participation? Just 9%—room to roar.

Hitting the On-Ramp: Starting Your InvIT Investing

Easier than a LASIK consult.

  1. Demat Drive:
    Open a Zerodha or Groww account—₹0 setup.

  2. Scout Assets:
    Check yields (8–10%), leverage (<70%), occupancy (90%+).

  3. Buy the Dip:
    Search the ticker (e.g., NSE: INDIGRID). Start with ₹15k.

  4. Cruise Control:
    Units settle T+2. Dividends quarterly or bi-annual. Reinvest half.

Anyone 18+ can invest. Diversify across 2–3 InvITs.

The Green Lights: Advantages of InvIT Investing

  • Yield Yum: 8–10% mandated payouts

  • Infra Exposure: Ride India’s growth with low equity correlation

  • Liquidity Lift: Daily trading for public InvITs

  • Tax Smarts: Pass-through benefits, LTCG at 10%

  • Pro Pilots: Asset managers handle operations

Top performers have delivered 12–15% annualized returns.

The Speed Bumps: Disadvantages to Dodge

  • Rate Rattles: Rising interest rates hurt valuations

  • Asset Anchors: Traffic slumps, regulatory changes

  • Volatility: 10–20% annual swings

  • Tax Twists: Short-term gains taxed at slab rates

  • Fees & Caps: 0.5–1% management + brokerage

  • Due diligence matters.

My InvIT Odyssey: Lessons from the Fast Lane

I started mid-2022 with ₹1 lakh from bonus scraps. As an eye surgeon juggling 12-hour OR days, I needed predictable income to offset equity volatility.

IndiGrid was my first buy—stable tariffs, solid governance.

Bharat Highways followed in 2024 for its HAM annuity stability.

Infra doesn’t thrill—it delivers. That’s the point.

Exit Ramp: Your InvIT Ignition Key

InvITs are the smart offramp from volatile equities to stable infra income.

With AUM heading toward ₹21 lakh crore by 2030 and yields humming at 8–10%, now’s a good merge lane.

Start small. Diversify. Let tolls compound.

And while hunting yields—don’t skip your eye check. Clear vision spots the best lanes.

Drive safe, invest sharper,


Dr. Shivam Sood
Eye Surgeon | Infra Investor | Road to Riches Rider

Shivam Sood
Next

Don’t Wait for Blurry Vision: The Eye Check-Ups That Save Sight (And Sanity)