Future of India Startups: Finance Minister Nirmala Sitharaman announced that domestic Indian companies are going to be allowed to list on the foreign exchange directly. Plus, they can list directly at the International Financial Services Center, or IFSC, in Ahmedabad.
This new policy focuses on providing Indian companies with easy access to foreign funds on different exchanges overseas.
Decisions taken during an SEBI event
An event was organized by SEBI, which is the capital markets regulator. During this event, Finance Minister Nirmala Sitharaman said, ‘The government has decided to allow direct listing of listed as well as unlisted companies on the International Financial Services Centre exchanges.
Also, she described this move as a very important step. Sitharaman also emphasized that this step will help facilitate global capital access for Indian Startups. Plus, it will help achieve better valuations.
According to a senior representative from the Ministry of Finance, the government is going to announce the rules related to this policy in the next few weeks. To initiate with, companies are going to be permitted to list at the International Financial Services Centre, which is located in GIFT City, Ahmedabad.
Also, the official noted that companies will be permitted to list in eight to nine designated foreign jurisdictions.
Other benefits for India Startups
The new policy allowing direct overseas listings can also offer a major boost to unicorns or startups, which are valued at more than $1 billion. Also, it can help the digital unit of the conglomerate Reliance. It has been eyeing a US listing after raising more than $2 billion from various investors, such as Google, Facebook, and even KKR.
A senior finance ministry official also gave a reference to past occurrences of companies that have been looking for foreign listings. It emphasized that this move is going to offer an alternative option for various investors. Also, it will help in widening the scope for Indian startups when it comes to global markets.
At present, various domestically listed entities of the country can list overseas through instruments like American Depository Receipts, or ADRs, as well as Global Depository Receipts, or GDRs. They will allow foreign investors to own as well as trade shares of foreign companies in the markets.
This new policy of direct overseas listing is going to provide a great alternative route for Indian Startups to have access to foreign capital. Also, it will allow Indian startups to attract a massive pool of capital while improving corporate governance. Plus, there are going to be benefits from dollar-denominated trades that will allow investors to save on hedging as well as currency conversion costs.
