Direct listing of indian companies gift city: In a pioneering development, the Central government has granted Indian companies the authority to be listed on foreign stock exchanges, with specific conditions to adhere to. Finance Minister Nirmala Sitharaman had previously shared information regarding this significant change.
Sitharaman stated, “Domestic companies will now have the option to directly list their securities on foreign exchanges. I’m also delighted to announce that the government has made a decision to permit the direct listing of both listed and unlisted companies on the IFSC exchange. This marks a substantial stride forward, as it will enhance access to international capital and lead to more favorable valuations.” This announcement was made in July.
Direct listing of indian companies gift city
The recent amendment to the MCA aims to streamline the process for Indian companies engaging in international business. Mahavir Lunawat, Managing Director of Pantomuth Capital Advisors and Chairman of the Association of Investment Bankers of India (AIBI), expressed his approval of this development. He noted that it will empower Indian companies to directly list their equity on IFSC exchanges within the Gift City.
Lunawat elaborated that this change allows companies already listed in India to pursue global listings within IFSC, and simultaneously, unlisted Indian companies can now list their equity in IFSC without the prerequisite of being listed in India.
It’s important to highlight that the listing process will be subject to the operational guidelines and listing framework set forth by the IFSCA and the International Stock Exchanges operating within the IFSC. Notably, Indian companies will no longer be obliged to issue Depository Receipts to raise capital internationally.
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Impact on Existing Shareholders
The latest development will have a significant effect on current shareholders. Global investors will now have an avenue to engage in Indian equities through the IFSC, which will help in minimizing foreign exchange risk since equities will be listed and traded in foreign currency. Furthermore, there are numerous tax incentives available, such as exemptions from capital gains tax and GST, among others, as elucidated by Lunawat.
This shift will provide investors with substantial flexibility to trade within IFSC, lowering their risk exposure and providing them with substantial tax advantages. Indian investors will also have the opportunity to take part in global equities that will be listed and traded within IFSC.
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Significant Developments in GIFT City: Fund Manager Commitments, Tax Benefits, and USD-Denominated Trades
There are 78 fund managers operating within GIFT City, collectively focusing on approximately $20 billion in assets. Out of this amount, roughly $4 billion has already been committed, and around $1 billion has been invested in India. These fund managers encompass a variety of investment types, including hedge funds, venture capital funds, and private equity funds.
According to the report, trading in GIFT City offers several advantages. All trades are conducted in U.S. dollars, effectively eliminating the need for foreign investors to bear additional expenses associated with currency conversion and hedging. In September 2023, the monthly trading volume on international stock exchanges within the IFSC reached $67.3 billion, as reported by Moneycontrol.
The report also highlights that income earned by non-resident investors from offshore investments routed through an Alternative Investment Fund (AIF) established within an IFSC is not subject to taxation. Legally, the IFSC is considered a distinct jurisdiction from the rest of India, specializing in providing financial services denominated in foreign currency.