States Lean on Infra Trusts to Replicate Delhi’s Monetisation Success

Indian states are increasingly adopting Infrastructure Investment Trusts (InvITs) to monetise public assets and attract long-term private investment, following the central government’s success with similar models. States such as Maharashtra, Gujarat, and Tamil Nadu are preparing to launch their own InvITs, while Rajasthan is in advanced discussions with the National Highways Authority of India (NHAI) to integrate its assets under a centralised road monetisation framework.

State governments have relied heavily on budgetary funding, borrowings and public-private partnerships (PPPs) for infrastructure delivery. Recognising the growing financing gap and the need for innovative models, states are now looking toward the InvIT model, hitherto more common at the central level as a vehicle to recycle capital, broaden investor bases, and enhance infrastructure delivery.

According to the Bharat InvITs Association (BIA), total assets under management (AUM) of InvITs in India have crossed Rs. 7 trillion (USD 78.8 billion) as of March 2025, while their combined market capitalisation stands at approximately Rs. 2.4 trillion. The expanding participation of states in this segment is expected to diversify the InvIT ecosystem extending beyond roads and power to include sectors such as ports, water treatment, urban infrastructure, and railways.

The entry of state-level InvITs will deepen market participation, attract a wider investor base, and create new opportunities for long-term capital.

To ensure institutional robustness, several states are exploring partnerships with the National Bank for Financing Infrastructure and Development (NaBFID) to support the structuring, financing, and operation of their proposed InvITs. This collaboration could help standardize governance frameworks and investor protections, thereby improving the credit profile and investor confidence of state-backed InvITs.

States are also identifying potential assets for monetization, including state highways, industrial corridors, and municipal infrastructure. For instance, Maharashtra, which manages the country’s largest state highway network spanning 31,992 km, and Gujarat, with 16,557 km, are well-positioned to pioneer such initiatives. Rajasthan and Tamil Nadu, with their significant infrastructure bases, are also advancing similar proposals.

The Government of India has successfully demonstrated the viability of asset monetisation through its Toll-Operate-Transfer (TOT) and InvIT models. Over the past five years, the Centre has monetised assets worth nearly Rs. 926 billion, with the NHAI InvIT, launched in 2022, becoming a benchmark for transparent and efficient capital recycling.

While state governments aim to emulate this success, analysts caution that the absence of central backing or guarantees may affect investor sentiment, particularly in early-stage InvITs. Investors are likely to evaluate each trust based on its asset quality, governance standards, and revenue stability.

The success of state-level InvITs will depend on their structure, transparency, and ability to ensure predictable cash flows. Structuring InvITs with appropriate regulatory oversight and professional management will therefore be crucial to building credibility and attracting sustained investor interest. By leveraging InvITs, states can bridge the infrastructure financing gap, reduce dependence on traditional budgetary resources, and strengthen their fiscal sustainability, marking a new phase of innovation in India’s infrastructure investment landscape.