Direct Listing Scheme
Context:
The Government has granted approval for the direct listing of securities by Indian public companies on the international exchanges within the GIFT IFSC.
Relevance:
GS-03 (Economy)
Key Highlights:
- The Department of Economic Affairs (DEA), Ministry of Finance, has introduced amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
- The newly notified ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’ is a result of the Finance Minister’s announcement in July 2023, aiming to enable direct listings of Indian companies on GIFT-IFSC exchanges initially.
- This regulatory framework empowers public Indian companies to issue and list their shares on approved international exchanges. Currently, the framework applies to unlisted public Indian companies, with SEBI working on operational guidelines for their listed counterparts.
- The India International Exchange and NSE International Exchange, both overseen by IFSCA, are currently designated as permitted stock exchanges under the amended Rules and the Scheme.
- This policy is anticipated to transform the landscape of the Indian capital market, providing Indian companies, particularly startups and those in sunrise and technology sectors, an alternative avenue to access global capital markets beyond domestic exchanges.
Benefits of the Move:
- Enhanced valuation for Indian companies
- Increased foreign investment inflows
- Unlocking growth opportunities
- Diversifying the investor base
- Offering flexibility for Indian companies to tap into both domestic and international markets
