SEBI Grade A Current Affairs — 5 August 2026

SEBI released a consultation paper proposing issuance of Depository Receipts (DRs) against units of Real Estate Investment Trusts (REITs) and publicly listed Infrastructure Investment Trusts (InvITs). This framework would allow foreign investors to access Indian REIT and InvIT units through DRs listed on overseas exchanges. The move aims to deepen capital markets, attract foreign capital into infrastructure and real estate sectors, and expand the investor base for these hybrid securities beyond domestic participants.

Depository Receipts are negotiable instruments issued by a foreign depository bank representing ownership of underlying securities — in this case, REIT and InvIT units — held by a domestic custodian. The concept is borrowed from the ADR/GDR framework used for equities, now proposed for REIT/InvIT units.

REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are pass-through vehicles regulated by SEBI that pool investor capital to own income-generating real estate or infrastructure assets respectively. They are required to distribute a minimum 90% of net distributable cash flows to unitholders.

By enabling DR issuance against REIT/InvIT units, SEBI seeks to: (1) internationalise these instruments and provide price discovery through global platforms; (2) allow foreign portfolio investors and institutional investors in jurisdictions where direct Indian market access is restricted to participate; (3) increase liquidity and unit demand, potentially compressing yield spreads.

This proposal fits SEBI's broader mandate under Section 11 of the SEBI Act — promoting development of the securities market while protecting investor interests. The consultation paper mechanism itself reflects SEBI's regulatory process before issuing binding circulars. For exam purposes, understand the chain: SEBI consultation paper → SEBI circular → exchange/depository compliance. The examiner frequently tests what specific instruments/acronyms stand for, who promoted key depositories, and the institutional architecture behind such frameworks.

The Taxation and Other Laws (Amendment) Bill, 2026 (Bill No. 150 of 2026) was introduced in Lok Sabha to provide targeted tax reliefs across four priority sectors: electronics manufacturing, data centres, diamond trading, and fund management. The bill proposes concessional tax rates and specific exemptions to attract investment and improve global competitiveness. It amends existing income-tax and other fiscal laws to operationalise these sector-specific incentives, reflecting the government's industrial policy priorities for high-growth and export-oriented industries.

This bill exemplifies how India uses targeted fiscal incentives — rather than blanket rate cuts — to steer investment into strategic sectors. Understanding its mechanism requires knowing two layers: the what (sector-specific concessional rates) and the why (crowding-in private capital into state-priority industries).

**Electronics Manufacturing:** India competes with Vietnam and China for global supply chain relocation. Tax reliefs lower effective cost of production, complementing the PLI scheme already in place.

**Data Centres:** Taxed ambiguously until now (as 'infrastructure' or 'services'), clarified treatment encourages hyperscaler and domestic investment, critical for India's digital economy goals.

**Diamond Trade:** India processes over 90% of the world's rough diamonds (primarily in Surat). Concessional rates on diamond trading income protect this labour-intensive export sector from margin erosion.

**Fund Management:** Offshore fund managers relocating to GIFT City IFSC were deterred by tax uncertainty. The bill addresses this by clarifying the tax treatment of fund management entities, making India's IFSC regime globally competitive.

For exam purposes, the key conceptual link is: selective tax expenditure → sectoral investment → GDP composition shift. The bill also demonstrates fiscal-monetary coordination — lower corporate tax burden reduces financing costs without the RBI needing to cut rates, achieving similar credit-growth outcomes through the supply side. SEBI aspirants should note the fund management angle intersects with SEBI's Alternative Investment Fund (AIF) and Portfolio Management Service regulations.