New Delhi:India is exploring the possibility of permitting domestic companies to directly list on foreign exchanges, as announced by Finance Minister Nirmala Sitharaman. This represents a potential revival of a plan that was previously deferred due to domestic opposition and concerns related to taxation.
Under the current regulations, Indian companies are not authorized to directly list on overseas exchanges; they can only do so through financial instruments like depository receipts.
The proposal to enable Indian firms to directly list on foreign exchanges was initially introduced in 2020 but was postponed due to concerns regarding potential tax implications and opposition from a segment of the ruling party. This faction expressed concerns about reduced Indian regulatory oversight for domestic companies listing abroad.
Sitharaman made these statements during a joint press conference with British Finance Minister Jeremy Hunt, held after bilateral discussions following the G20 meetings over the weekend in New Delhi.
Hunt expressed his satisfaction with this development, emphasizing it as a significant step forward. “We are particularly pleased to make a big step forward to make a first confirmation by India that it will explore the London Stock Exchange as an international destination for the direct listing of Indian companies,” Hunt said.
In 2020, Reuters reported that the London Stock Exchange had been in discussions with several Indian technology firms regarding their overseas stock listings. However, these plans were put on hold by the Indian government.
Furthermore, in July, India announced its decision to allow companies to list on exchanges registered in the International Financial Services Centre (IFSC). This new financial hub, situated in the Gujarat International Financial Tech City (GIFT) in India, was created to provide companies with easier access to foreign capital markets.
“We have mentioned earlier once that we are looking at listing, commencing with the IFSC, so once that is done, we may look at moving further (with overseas listing),” Sitharaman said.
“So at this stage, we have said that we are looking at listing in IFSC first,” she added.
With inputs from Reuters
