In a significant development aimed at bolstering foreign capital inflows, the Indian government has authorized its listed and unlisted companies to list their shares on exchanges registered in a new financial hub located in Gujarat. Finance Minister Nirmala Sitharaman made the announcement on Friday, providing businesses with a gateway to access easier and more cost-effective foreign capital.
The International Financial Services Centre (IFSC), nestled within the Gujarat International Financial Tech City (GIFT), is a tax-neutral financial center, envisioned as Prime Minister Narendra Modi’s flagship project to rival global hubs like Singapore. Offering fiscal incentives and a conducive regulatory environment, GIFT-IFSC strives to attract businesses seeking to draw foreign funds and broaden their financial horizons.
“I’m pleased to announce that the government has taken a decision to enable direct listing of listed and unlisted companies on the IFSC exchanges,” Minister Sitharaman stated, heralding the new avenue for companies to access international investors through GIFT’s financial ecosystem.
With GIFT City emerging as a thriving financial hub, various exchanges operate within the IFSC, encompassing stock exchanges, a commodity bourse, and a bullion exchange. This vibrant ecosystem facilitates seamless trading and investment activities for Indian firms seeking to broaden their investor base.
Previously, Indian companies were limited to listing on foreign exchanges through instruments such as depository receipts. However, with the government’s latest move, they can now explore the potential of listing on the IFSC exchanges, providing greater flexibility in accessing foreign capital markets.
It is noteworthy that the GIFT-IFSC has already attracted attention with the recent migration of SGX Nifty from the Singapore Exchange’s platform to NSE’s International Exchange (NSE IX) within GIFT City. This shift signifies growing confidence in GIFT’s capabilities and positions it as a strong contender to compete with global financial hubs.
The government’s 2020 plans to allow companies to have their primary listings on foreign exchanges had faced opposition from nationalist groups, including the Swadeshi Jagran Manch, the economic wing of the RSS. As a result, the government had temporarily frozen such plans, focusing instead on reinforcing domestic capital markets.
Now, with the IFSC route offering similar benefits of foreign capital, Indian companies can leverage this opportunity to tap into international investors and fuel their growth aspirations.
Sources By Agencies