In a significant move to boost India’s economy and enhance opportunities for domestic companies, Finance Minister Nirmala Sitharaman declared a groundbreaking development today. Indian companies will now have the option to directly list on foreign exchanges and the International Financial Services Centre (IFSC) bourse in Ahmedabad. This long-awaited approval comes after three years since its initial proposal as part of the Covid relief package.
The primary objective of this move is to provide domestic companies with the means to access foreign funds by listing their shares on various overseas exchanges. By allowing direct listings of securities in foreign jurisdictions, the government aims to open up avenues for Indian businesses to tap into global capital and achieve better valuation, thus fostering their growth and competitiveness on an international scale.
The inception of this initiative can be traced back to the liquidity package announced during the pandemic in May 2020, when the need for diversifying funding sources and strengthening India’s economic resilience became apparent. Now, with the green light given for direct listings abroad and on the IFSC exchange, Indian businesses can forge stronger connections with international investors and expand their reach beyond national borders.
At a major event celebrating the launch of AMC Repo Clearing and a corporate debt market development fund, the Finance Minister announced an exciting development. These initiatives are intended to strengthen the corporate bond market and give a boost to the entire financial system.
Ms Sitharaman also stressed the importance of conducting a regulatory impact assessment, which can offer valuable insights into the consequences of regulatory decisions. This assessment will aid both regulated entities and the broader markets in better understanding the implications of their actions, ensuring a more transparent and stable financial landscape.
Furthermore, the Finance Minister called upon financial market regulators to prioritize the quality, proportionality, and effectiveness of their decisions. By doing so, regulators can create an environment where companies find it easier to conduct their business operations, leading to increased efficiency and growth in the market.
The government is encouraging cities to finance themselves through the debt market. By doing so, they can improve their credit ratings and secure better bond pricing. This will allow municipalities to embark on development projects that will benefit both citizens and the nation.
Overall, the Finance Minister’s announcement marks a significant milestone in India’s financial landscape, opening new doors for domestic companies and reinforcing the country’s position as an attractive destination for global investors. The decision to enable direct listings on foreign exchanges and the IFSC exchange is a bold step towards fostering economic growth and prosperity, further solidifying India’s position as a major player in the global market.
