GIFT-IFSC, Revolutionizing Indian Markets: The Secret Regulatory Shift That’s Transforming the Capital Market Landscape!

The Department of Economic Affairs (DEA), under the Ministry of Finance, has recently amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. Additionally, they have introduced the ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme.’ Simultaneously, the Ministry of Corporate Affairs (MCA) has issued the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.

Regulatory Framework for International Listing

These changes collectively establish a comprehensive regulatory framework, allowing public Indian companies to issue and list their shares on approved international exchanges. Currently, the framework permits unlisted public Indian companies to list their shares on international exchanges. The Securities and Exchange Board of India (SEBI) is in the process of releasing operational guidelines for listed public Indian companies. The India International Exchange and NSE International Exchange, operating under the regulatory supervision of IFSCA, are currently designated as permitted stock exchanges under the Rules and the Scheme.

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Historical Context and Enabling Provisions

Previously, the Companies (Amendment) Act, 2020, included enabling provisions in the Companies Act, 2013, to facilitate the direct listing of specified classes of securities of public companies incorporated in India on approved stock exchanges in permissible foreign or prescribed jurisdictions. These provisions, effective since October 30, 2023, paved the way for the recent regulatory changes.

Impact on Indian Capital Market

The Ministry of Finance emphasizes that this policy initiative, enabling the listing of Indian companies in GIFT-IFSC, will reshape the Indian capital market. It offers Indian companies, particularly startups and those in the sunrise and technology sectors, an alternative avenue to access global capital beyond domestic exchanges. The move is expected to lead to better valuation of Indian companies, aligning with global standards, and boost foreign investment flows. It also unlocks growth opportunities and broadens the investor base, providing flexibility for public Indian companies to raise capital in both domestic and international markets.

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Significance for GIFT-IFSC

GIFT-IFSC, India’s first international financial services center, connects the country with global opportunities and facilitates the seamless flow of global capital into India. The unified statutory regulatory authority, International Financial Services Centres Authority (IFSCA), has played a pivotal role in creating an agile and world-class regulatory and business environment in GIFT-IFSC. This initiative is expected to provide new investment opportunities, diversify financial products, and enhance liquidity, contributing to the dynamic development needs of GIFT-IFSC.

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