Government Greenlights Direct Listing of Indian Companies on GIFT-IFSC International Exchanges

In a landmark move, the Indian government has opened new doors for Indian companies to tap into global capital markets. Following Finance Minister Nirmala Sitharaman's announcement in July 2023, the Ministry of Finance and Department of Economic Affairs have implemented regulations enabling direct listing of securities by public Indian companies on International Exchanges of GIFT-IFSC.

Paving the Way - Regulatory Framework and Key Dates

• July 28, 2023: The initial announcement by Finance Minister Nirmala Sitharaman sets the stage for this major policy shift.

• October 30, 2023: Provisions within the Companies (Amendment) Act, 2020, come into effect, paving the legal path for direct listings.

• January 24, 2024: The Department of Economic Affairs amends the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, introducing the "Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme."

• Present: The Ministry of Corporate Affairs (MCA) is finalizing operational guidelines for listed public Indian companies seeking direct listings.

Initial Focus on Unlisted Public Companies, Expanding Horizons Soon

This new framework initially allows unlisted public Indian companies to directly list their shares on permitted international exchanges. The India International Exchange and NSE International Exchange at GIFT-IFSC are currently recognized as such platforms. However, SEBI is actively working on formulating operational guidelines for listed public Indian companies to join the fray in the near future.

A Game Changer for Indian Capital Markets - Potential Benefits and Impact

This policy initiative holds immense potential to reshape the Indian capital market landscape:

• Alternative Pathway to Global Capital: Startups and technology companies, often facing limitations in the domestic market, now have a new avenue to raise capital from international investors.

• Enhanced Valuation and Global Alignment: Access to international markets can lead to higher valuations for Indian companies, bringing them closer to global standards.

• Attracting Foreign Investments and Boosting Growth: The influx of foreign investments can fuel the growth of Indian companies and unlock new opportunities for expansion.

• Broader Investor Base and Ecosystem Growth: Diversifying investor base with international participants strengthens the capital market ecosystem at GIFT-IFSC.

• Flexibility in Currency Options: Companies can choose to raise capital in Indian Rupee domestically or in foreign currency at IFSC, catering to specific needs and global ambitions.

Gearing Up for the Future - Next Steps and Expectations

The Securities and Exchange Board of India (SEBI) is currently formulating operational guidelines for listed public companies to join this platform. Initially, India International Exchange and NSE International Exchange at GIFT-IFSC are recognized as permitted exchanges for direct listing.

A Future of Global Reach - Indian Companies Poised to Shine on the World Stage

This policy shift marks a significant step towards a more globalized and integrated Indian capital market. As companies leverage this opportunity to access international capital and tap into a wider investor base, the potential for growth and success on the world stage is immense. The future looks bright for Indian companies with global aspirations, and the direct listing pathway paves the way for them to shine on the international stage.