India Grid Trust (IndiGrid)

India Grid Trust, commonly known as IndiGrid, is India’s first power sector Infrastructure Investment Trust (InvIT). It represents a significant innovation in infrastructure financing, capital markets development, and long-term investment mobilisation. IndiGrid plays an important role in strengthening India’s power transmission infrastructure while linking banking, finance, and the broader Indian economy through a stable, market-based financing model.

Background and Establishment of IndiGrid

India Grid Trust was launched in 2016 under the regulatory framework for Infrastructure Investment Trusts introduced by the Securities and Exchange Board of India. The creation of IndiGrid was driven by the need to unlock capital tied up in operational infrastructure assets and to attract long-term domestic and global investors into India’s infrastructure sector.
IndiGrid was sponsored by a private infrastructure developer and listed on Indian stock exchanges, marking a milestone in the evolution of India’s infrastructure finance ecosystem. As the first InvIT in the power transmission sector, it set a precedent for asset monetisation and market-based funding of infrastructure.

Concept and Structure of an Infrastructure Investment Trust

An Infrastructure Investment Trust is a pooled investment vehicle that owns and operates income-generating infrastructure assets. IndiGrid owns a portfolio of operational power transmission assets that generate predictable cash flows through long-term transmission service agreements.
The InvIT structure involves:

• A trust that holds infrastructure assets.
• Investors who purchase units of the trust.
• Regular distribution of cash flows to unit holders.

This structure allows infrastructure developers to recycle capital while providing investors with stable, yield-oriented investment opportunities.

Role in Power Transmission Infrastructure

IndiGrid focuses on the ownership and operation of electricity transmission assets, which are critical for the functioning of India’s power sector. Transmission networks enable the movement of electricity from generation centres to consumption hubs, supporting industrial activity, urbanisation, and household demand.
By investing in operational transmission projects, IndiGrid contributes to grid stability, reduced transmission losses, and improved reliability of power supply. These outcomes are essential for sustained economic growth and industrial competitiveness.

Importance for Banking and Infrastructure Finance

From a banking and finance perspective, IndiGrid offers an alternative financing channel for infrastructure development. Traditionally, infrastructure projects in India relied heavily on bank lending, which created asset-liability mismatches and concentration risks.
IndiGrid helps address these challenges by:

• Reducing dependence on bank credit for long-term infrastructure funding.
• Enabling banks and developers to monetise completed assets.
• Freeing up bank capital for new lending.

This shift supports healthier bank balance sheets and more efficient allocation of financial resources.

Role in Capital Markets and Investment

IndiGrid has expanded the range of investment options available in Indian capital markets. Its units attract a diverse investor base, including domestic institutions, pension funds, insurance companies, and foreign investors seeking stable, long-term returns.
The predictable cash flows from regulated transmission assets make IndiGrid particularly suitable for long-term investors with low risk tolerance. This deepens capital markets and promotes the development of patient capital in India.

Regulatory Framework and Governance

IndiGrid operates under a well-defined regulatory framework overseen by the Securities and Exchange Board of India, which prescribes norms related to asset quality, disclosures, leverage, and distribution of cash flows.
This regulatory oversight ensures transparency, investor protection, and financial discipline. Strong governance structures are critical to maintaining confidence in InvITs as a credible investment vehicle.

Impact on the Indian Economy

At the macroeconomic level, IndiGrid supports economic growth by strengthening power infrastructure, which is a foundational requirement for industrialisation, services expansion, and digitalisation.
By facilitating capital recycling and attracting long-term investment, IndiGrid:

• Accelerates infrastructure development.
• Reduces fiscal and banking sector pressure.
• Enhances efficiency in the power sector.

These benefits contribute to improved productivity and competitiveness of the Indian economy.

Contribution to Sustainable Finance

Power transmission infrastructure is a key enabler of renewable energy integration. By expanding and strengthening transmission networks, IndiGrid indirectly supports the evacuation of renewable power and the transition towards a cleaner energy mix.
This aligns IndiGrid with broader sustainable finance and climate goals, making it attractive to investors with environmental, social, and governance considerations.

Advantages of the IndiGrid Model

IndiGrid offers several advantages:

• Stable and predictable cash flows.
• Reduced risk compared to greenfield infrastructure projects.
• Access to long-term capital for infrastructure developers.
• Enhanced transparency through market listing and regulation.