New Delhi, Nov 5 : India's infrastructure investment trust (InvIT) market is projected to reach Rs 21 lakh crore by 2030, fuelled primarily by infrastructure investment requirements, a report said on Wednesday.

Asset management firm Client Associates (CA), in a white paper, said that the growth will be driven by $4.5 trillion in infrastructure investment needs by 2030, government initiatives such as the National Infrastructure Pipeline (NIP), increased institutional allocations to alternative assets.

Further, corporate capital optimisation via InvITs, and low retail penetration offering meaningful room for growth, the firm said.

Client Associates in the white paper reported that InvITs achieved average pre-tax returns of 10'12 per cent and post-tax returns of 7'9 per cent, outperforming traditional fixed-income instruments.

"InvITs exhibit a distinct risk-return profile with volatility of 10.2 per cent versus 15.4 per cent for equities, offering a relatively stable investment profile while delivering total returns of 12.2 per cent -- slightly below equities of 12.3 per cent -- but providing steady income," the report said.

As of FY25, India's InvIT ecosystem includes 27 registered trusts with a combined AUM of Rs 6.3 lakh crore, having mobilised approximately $15.8 billion over the past five years, it noted.

The report highlighted a recent SEBI decision that reclassified REITs as equity for mutual funds, while keeping InvITs categorised as hybrids.

This shows that, "REITs are more aligned with equity in terms of structure and liquidity, while InvITs are predominantly privately placed with more stable cash flows and lesser liquidity, behaving more like debt-hybrid rather than equity," Client Associates highlighted.

The white paper mentioned that government reforms are driving growth, including the National Infrastructure Pipeline (NIP), asset monetisation through entities such as NHAI, and tax reforms in 2024 that reduced long-term capital gains (LTCG).

/IANS