InvITs: earning from highways, power lines and pipelines

Imagine owning a tiny share of a toll highway or a power transmission line, and getting paid every time it earns money. That's an InvIT — one of the lesser-known but interesting income investments in India. This is for learning only.

What an InvIT is

InvIT stands for Infrastructure Investment Trust. It pools investors' money to own income-generating infrastructure — highways, power transmission lines, gas pipelines — and passes the cash those assets earn back to you. You buy and sell units on the NSE/BSE, just like a share.

By law, an InvIT must distribute at least 90% of its net cash flow to unit-holders. That's what makes them attractive to people who want regular income.

Real examples and yields

A handful are listed in India — including IndiGrid, PowerGrid InvIT and IRB InvIT. Their payouts and yields vary:

• PowerGrid InvIT has distributed roughly ₹12 per unit a year.
• IndiGrid has paid around ₹16 per unit a year.
• Depending on the unit price, yields have ranged roughly 8–12% — higher than most REITs, but with more risk.

The risks — read these

• Asset concentration: some trusts rely on a few assets. If one underperforms, payouts can dip.
• Traffic / usage risk: a toll-road InvIT earns from actual traffic, so its income can swing. A power-line InvIT with fixed long-term tariffs is steadier.
• Regulatory and interest-rate risk: like all income assets, InvITs become less attractive when interest rates rise.
• Tax: the distributions (interest and dividend parts) are generally taxed at your slab rate.

Where they fit

InvITs suit investors who want steady income and understand they're taking on more risk than a bond or FD for that higher yield. They're a close cousin of REITs — which do the same thing for real estate (offices, malls). To compare, read REITs: owning real estate through the stock exchange. Treat them as one slice of a diversified portfolio, not the whole plate.

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