1. Introduction
The Securities and Exchange Board of India (“SEBI”) has, on August 4, 2026, issued a Consultation Paper (“CP”) proposing a regulatory framework for issuance of Depository Receipts (“DRs”) against units of Real Estate Investment Trusts (“REITs”) and Publicly Listed Infrastructure Investment Trusts (“InvITs”). The proposals are based on recommendations of SEBI’s Hybrid Securities Advisory Committee (“HYSAC”). Public comments have been invited by August 25, 2026.
2. Regulatory Background
DRs are foreign currency-denominated instruments issued by a foreign depository in a permissible jurisdiction against securities deposited with a domestic custodian in India, enabling foreign investors to trade in familiar overseas markets without dealing directly with Indian exchanges. Issuance of DRs is presently governed, for companies, by the Depository Receipts Scheme, 2014 (“DR Scheme”), read with the Companies Act, 2013 and the Companies (Issue of Global Depository Receipts) Rules, 2014.
Under Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (“SCRA”), “securities” include units issued by a “pooled investment vehicle”, a term that per Section 2(da) of the SCRA, covers SEBI-registered REITs and InvITs. Units of REITs/InvITs therefore already qualify as “permissible securities” eligible for DR issuance under the DR Scheme. Similarly, the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”) permit persons resident outside India to invest in DRs issued against eligible securities and separately permit foreign investment directly in units of REITs/InvITs as “Investment Vehicles”.
The CP notes that while the DR Scheme and NDI Rules already permit issuance of DRs against REIT/InvIT units in principle, there is no corresponding enabling provision or operational framework under the SEBI (REIT) Regulations, 2014 (“REIT Regulations”) or the SEBI (InvIT) Regulations, 2014 (“InvIT Regulations”). The CP seeks to fill this gap.
3. Rationale for the Proposal
Units of REITs and InvITs are presently INR-denominated and listed only on recognised Indian stock exchanges; foreign investors can subscribe/hold units only subject to RBI/Government guidelines. SEBI’s stated rationale is that a DR framework would give foreign investors an additional, more familiar route – trading in foreign currency on a permitted international exchange and would help REITs and InvITs tap a wider pool of foreign capital, thereby aiding fundraising and enhancing international visibility of these instruments.
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