Direct listing of Indian companies on GIFT City exchanges allowed

The central government on Wednesday issued a notification allowing the direct listing of shares of Indian companies on the international exchanges based at GIFT City in Gujarat’s Gandhinagar, a move that is likely to boost flow of foreign funds into the country. 

As per a notification issued by the union finance ministry, the eligible exchanges are: India International Exchange and NSE International Exchange.

“This policy initiative, to enable listing of Indian companies in GIFT-IFSC, will reshape the Indian capital market landscape and offers Indian companies, especially start-ups and companies in the sunrise and technology sectors, an alternative avenue to access global capital beyond the domestic exchanges,” the finance ministry said in a statement. 

This is expected to lead to better valuation of Indian companies in line with global standards of scale and performance, boost foreign investment flows, unlock growth opportunities and broaden the investor base, it added. 

The public Indian companies will have the flexibility to access both markets i.e. domestic market for raising capital in INR and the international market at IFSC (International Financial Services Centres) for raising capital in foreign currency from the global investors.   

GIFT-IFSC is a tax neutral financial centre, which aims to compete with hubs like Singapore as it provides fiscal incentives and an easier regulatory environment. Exchanges based at the Gujarat International Finance Tec-City (GIFT City) are under the regulatory supervision of the International Financial Services Centres Authority (IFSCA).

Earlier, only unlisted public Indian companies were allowed to list their shares on an international exchange at GIFT City. 

The Department of Economic Affairs has amended Foreign Exchange Management (Non-debt Instruments) Rules and notified the ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’. Simultaneously, the Ministry of Corporate Affairs has issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024. 

Securities and Exchange Board of India (SEBI) is in the process of issuing the operational guidelines for listed public Indian companies, the ministry said. 

“These, together, provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international exchanges,” the ministry noted in the statement. 

This initiative will particularly benefit Indian companies going global and having ambitions to look at opportunities for expanding their presence in other markets. It is also expected to provide a boost to the capital market ecosystem at GIFT-IFSC by provision of new investment opportunities for investors, diversification of financial products and by enhancing liquidity.