Markets regulator SEBI has issued comprehensive circulars on Friday, May 15, 2026, expanding the permitted use of fresh borrowings by Infrastructure Investment Trusts (InvITs) whose net debt exceeds 49% of the value of their assets. According to the latest circulars, fresh borrowings above the limit can now be used for capital expenditure aimed at improving asset performance or expanding infrastructure capacity. The circulars have come into immediate effect and stock exchanges have been directed to publish and disseminate their contents on their websites. These circulars follow amendments made to the SEBI (Infrastructure Investment Trusts) Regulations, 2014, on April 17, 2026, building on previous regulatory amendments from April 2026.
As per the latest SEBI circulars, InvITs can use such borrowings for capital expenditure to enhance asset performance or for capacity augmentation. The regulator has also allowed these funds to be used for major maintenance expenses related to road projects, with major maintenance referring to non-routine expenditure incurred in line with obligations under concession agreements. According to the circulars, a major maintenance expense would mean expenditure incurred on the maintenance of a road project that is not routine maintenance and is in accordance with obligations specified in the concession agreement. Additionally, refinancing of existing debt by the InvIT, its special purpose vehicle (SPV), or holding company (Holdco) is permitted, provided the original borrowing was for permitted purposes and only the principal amount is refinanced. The circulars specifically permit fresh borrowings for capital expenditure aimed at improving asset performance or expanding infrastructure capacity, with funds also available for major maintenance work that is especially important for road projects.
According to the SEBI circulars, the refinancing provisions include specific limitations where only the principal amount can be refinanced, while accrued interest, fees and other charges will not be eligible for refinancing. The regulator has clarified that an SPV holding an infrastructure project will continue to be treated as an SPV even after the concession agreement or similar agreement comes to an end, subject to certain conditions. As per the latest circulars, these changes allow InvITs, their Special Purpose Vehicles (SPVs), and holding companies to refinance existing loans, as long as the original borrowing followed InvIT rules, with the principal amount being the only eligible component for refinancing. The circulars have also clarified that the original debt being refinanced must have been utilised for purposes permitted under Regulation 20(3)(b)(ii) of the InvIT Regulations.
As reported by The Hindu BusinessLine and ETLegalWorld, the investment manager of the InvIT will have to either exit the investment in such SPV through sale, liquidation, winding up or merger, or acquire a new infrastructure project in the same SPV within one year. The one-year period will be counted from the later of the completion or termination of the concession agreement, conclusion of pending claims, litigation or tax assessments, and related appeals, or completion of the defect liability period. According to ETLegalWorld, the time taken to obtain statutory or regulatory approvals for the sale, liquidation, winding up, or merger of the SPV will be excluded from this timeline. The circulars have prescribed detailed disclosure requirements for InvITs that continue to hold such SPVs. At the InvIT level, investment managers will have to disclose a detailed breakup of the gross and net value of investments in SPVs where concession agreements or similar agreements have ended or been terminated. At the SPV level, disclosures will include project details, the date of expiry or termination of the agreement, the status of vesting certificates or handover documents, the carrying value of assets and liabilities, contingent liabilities, debt repayment schedules, and whether the SPV has sufficient assets to meet its liabilities.
The InvIT sector managed over ₹5.8 lakh crore in assets by 2025, with the sector expected to grow significantly in the coming years. As per The Hindu BusinessLine, the Indian infrastructure market is expected to grow from an estimated USD 205.96 billion in 2026, with a projected 8% annual growth rate until 2031. Government programs like the National Infrastructure Pipeline (NIP) and PM Gati Shakti are directing substantial public funds, with government bodies still making most of the investments. However, the sector faces major funding hurdles, including long project timelines and high capital needs. InvITs are seen as a key way to help overcome these issues, bringing in private money and allowing developers to reduce debt to fund new projects. Lower interest rates in 2026 could also support sector growth by reducing borrowing costs for InvITs. Despite these positive developments, the wider borrowing options bring higher financial risks if not handled carefully, with more capacity for debt above the 49% limit potentially leading to over-borrowing during economic slowdowns or when interest rates rise.
