Budget 2026 Bets on REITs and Foreign Capital to Deepen Markets & Monetise Public Assets

New Delhi | February 2, 2026: The Union Budget 2026-27 REITs policy reflects a major shift in the government’s approach regarding asset monetisation and deepening of capital markets. The budget emphasises the requirement for monetisation of Real Estate Investment Trusts (REITs), infrastructure financing, and expanded access for international investors.

The monetisation and recycling of large, significant real estate properties in the Central Public Sector Enterprises (CPSEs) is now being proposed to fast track through the establishment of specialised CPSE REITs. This is a change for CPSEs regarding the public asset ownership model. This marks a transition from passive ownership of public assets to market-linked, income-generating structures.

CPSEs hold substantial land and commercial real estate assets. Many of these have been identified for monetisation under the National Asset Monetisation Pipeline. By placing these assets into REIT structures, the government aims to unlock long-term value, improve balance-sheet efficiency for public enterprises, and recycle capital into new infrastructure development.

As per the Indian REITs Association, this move sends a strong signal of intent. “Dedicated CPSE REITs can accelerate capital recycling and expand access to high-quality, income-generating assets for a wider investor base through transparent and regulated instruments,” the association said.

Since CPSEs are often required to provide steady returns, their REITs are expected to focus on high-yield, stable income distributions. Experts note that CPSE-owned properties are usually well-located, professionally managed, and supported by stable tenant profiles, making them highly attractive to long-term, income-seeking investors.

Read: Union Budget 2026-27: PMAY Boost, But Affordable Housing Misses Relief

Infrastructure Push Strengthens Union Budget 2026-27 REITs Backdrop

The REIT-focused strategy is reinforced by the budget’s continued emphasis on infrastructure investment. Capital expenditure for FY27 has been raised by 9% to ₹12.2 lakh crore, strengthening the pipeline for commercial, transport, and public infrastructure assets that could eventually be monetised through REITs and Infrastructure Investment Trusts (InvITs).

The sustained focus on urban centres, including cities with populations above five lakh, is expected to open new opportunities across established metros as well as emerging Tier II and Tier III markets.

At present, India has five listed REITs: Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Knowledge Realty Trust. The entry of CPSE-backed REITs could significantly expand the market and attract large domestic and institutional investors.

Boost for Data Centres and Digital Infrastructure

Finance Minister Sitharaman announced a tax holiday until 2047 for foreign companies offering global cloud services using data centres located in India. To qualify, such companies must serve Indian customers through an Indian reseller company.

The proposal is expected to boost investment in data centres, a fast-growing asset class that could also become a key component of future REIT portfolios.

Legal Relief for NRI Property Buyers

The Budget also introduced major compliance relief for resident individuals and Hindu Undivided Families (HUFs) purchasing property from non-residents. From October 1, 2026, buyers will no longer be required to obtain a Tax Deduction and Collection Account Number (TAN) to deduct and deposit Tax Deducted at Source (TDS).

Instead, TDS will be reported using the buyer’s Permanent Account Number (PAN), aligning the process with agreements between two resident parties. Currently, the TAN requirement applies even for a single transaction involving a non-resident seller, creating what the budget announcement described as an unnecessary compliance burden.

To enable this change, the government has proposed amending Section 397(1)(c) of the Income Tax Act to exempt resident individuals and HUFs from obtaining TAN for such transactions.

Read Also: Why Joint Taxation Is Back on the Union Budget 2026 Agenda

New Route for Overseas Equity Investors

Further widening India’s capital markets, the Budget proposed a new route for overseas individuals, including NRIs and foreign nationals, to invest directly in Indian equities under the Reserve Bank of India’s Portfolio Investment Scheme (PIS).

Under the revised framework, the individual investment cap for Persons Resident Outside India (PROIs) has been increased to 10% of a company’s paid-up capital from 5%, while the overall limit has been raised to 24% from 10%. The investments can be made on return and non-return bases through specified banks, in line with FEMA rules.

Officials said the changes follow discussions between the RBI and SEBI since early 2025, aimed at widening the investor base and supporting inflows amid sustained foreign portfolio investor outflows.

Together, the measures highlight how the Union Budget 2026-27 REITs policy is being used to deepen capital markets, infrastructure spending, and foreign participation to drive capital formation, deepen markets, and fuel long-term economic growth.