New Delhi [India], September 18 (ANI): Capital markets are set to play a crucial role in funding India's infrastructure expansion as the country pushes towards its growth goals, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said on Thursday. Speaking at the Infrastructure Conclave 2025, Pandey highlighted that infrastructure is not a short-term bet and capital markets allow long-term gains.

Pandey highlighted four key strengths supporting his claims for capital markets: 'First, they bring long-term patient capital. Infrastructure is not a short-term bet. Capital markets allow savings from pension funds, insurance companies, sovereign wealth funds, and long-horizon investors to be channelled into such assets,' he said.

Pandey said, capital markets help diversify sources of finance. 'Second, relying solely on banks or government budgets exposes us to concentration risk. Markets, on the other hand, offer a palette of instruments, corporate bonds, Infrastructure Investment Trust (InvIT), REITS, municipal bonds that spread risk across multiple participants,' he noted.

'Third, they offer a risk-sharing model. For example, InvITs allow developers to monetize operational assets while investors gain access to stable yield generating infrastructure. And fourth, capital markets enforce discipline, transparency, and governance through disclosure norms, independent audits, and investor scrutiny,' Pandey added.

Put together, these features make capital markets not just financiers, but also guardians of quality and credibility in infrastructure projects.

SEBI Chairman also pointed to the growing use of instruments like IPOs, rights issues, and private placements by infrastructure firms, which together account for nearly one-fifth of the total market capitalisation of listed companies. Over the last decade, infrastructure indices have delivered annualised returns of 12-14 per cent, showing the sector's steady value for investors.

Real estate investment trusts (REITs) have also emerged as important avenues. Pandey cited the National Highways Infrastructure Trust as an example where operational road assets were transferred to an InvIT, freeing capital for new projects while offering investors income-generating assets. At present, five REITs and 23 InvITs registered with SEBI have mobilised Rs. 1.5 trillion, with assets under management of Rs. 8.7 trillion as of FY25.

Alternative Investment Funds (AIFs) are another significant contributor, growing fivefold in five years, from Rs. 1.1 lakh crore in March 2019 to Rs. 5.7 lakh crore by June 2025. 'Infrastructure funds under category 1 AIFs have already invested over Rs. 7,500 crore as of June 2025, creating real impact on the ground,' Pandey said.

The SEBI chief also underlined the potential of municipal bonds for financing urban infrastructure. Since 2017, local bodies across cities such as Chennai, Varanasi, Agra, and Ahmedabad have raised Rs. 3,134 crore through 21 bond issuances. He added that green bonds, with 24 issuances mobilising over Rs. 7,500 crore since 2017, are increasingly critical for climate-friendly projects in renewable energy and clean transport.

'Infrastructure is more than roads, ports, airports, dams, telecommunication, or power plants. It is the backbone of economic progress. It connects producers to markets, people to opportunities, and India to its aspiration of becoming a $5 trillion economy,' he said.

Citing a World Bank study, Pandey noted that increased infrastructure investment directly boosts GDP, a trend visible in India's highways, metros, airports, and digital connectivity. (ANI)