Initiative to boost foreign investment flows, unlock growth opportunities and broaden the investor base for Indian companies

In pursuance of the announcement on July 28, 2023 by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman to enable direct listing of Indian Companies at GIFT- IFSC exchanges in the first phase, the Department of Economic Affairs (DEA), Ministry of Finance, has amended Foreign Exchange Management (Non-debt Instruments) Rules, 2019, and notified (CLICK HERE FOR NOTIFICATION) the ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’.

Simultaneously, the Ministry of Corporate Affairs (MCA) has issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 (CLICK HERE FOR NOTIFICATION).

These, together, provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international exchanges. As of now, the framework allows unlisted public Indian companies to list their shares on an international exchange. SEBI is in the process of issuing the operational guidelines for listed public Indian companies. The international stock exchanges at GIFT-IFSC under the regulatory supervision of IFSCA namely, India International Exchange and NSE International Exchange have been, currently, prescribed as permitted stock exchanges under the Rules and the Scheme.

Earlier, through the Companies (Amendment) Act, 2020, enabling provisions were included in the Companies Act, 2013, to allow direct listing of prescribed class (es) of securities of prescribed class (es) of public companies incorporated in India on permitted stock exchanges in permissible foreign jurisdictions or other prescribed jurisdictions. The enabling provisions of the Companies (Amendment) Act, 2020 were, accordingly, brought into force with effect from 30^th October, 2023. 

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. 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. 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 for raising capital in foreign currency from the global investors. 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.

(CLICK HERE FOR FAQs ON DIRECT LISTING SCHEME)

ABOUT GIFT-IFSC

GIFT-IFSC is the maiden international financial services centre of India that connects India with global opportunities and also enables the Indian economy to connect with the global financial system and allows seamless and easy flow of global capital into India. To cater to the dynamic development needs of GIFT IFSC, the unified statutory regulatory authority, International Financial Services Centres Authority (IFSCA) has taken significant steps in accelerating global sustainable capital flows by providing an agile and world class regulatory and business environment in GIFT IFSC.

Direct listing on international exchanges expands fundraising options for public Indian companies, enabling dual market access. Amendments and a new scheme enable public Indian companies to directly list equity on prescribed GIFT IFSC international exchanges, presently permitting unlisted public companies to list on India International Exchange and NSE International Exchange; operational guidelines for listed companies remain to be issued. The framework complements Companies Act enabling provisions and amended foreign exchange rules to allow issuance and listing in permissible international venues, facilitating dual access to domestic INR and IFSC foreign currency capital markets and aiming to broaden investor base and enhance liquidity.