GIFT City international exchanges: In a groundbreaking move that is set to amplify foreign investment, the Indian government has officially paved the way for Indian companies to directly list on the international exchange within the Gujarat International Finance Tec-City (GIFT) International Financial Service Centre (IFSC).
This move, driven by government-issued rules, is expected to usher in a new era of opportunities for businesses.
Current Landscape in GIFT City
As of now, GIFT City hosts two prominent international exchanges the India International Exchange (India INX) of BSE and the International Exchange of NSE. The vibrant financial hub boasts 69 broker-dealers, 19 clearing members, 2 clearing corporations, and 5 custodians registered within its precincts.
Evolution of the Initiative
The journey towards this historic moment commenced on July 28 last year when Finance Minister Nirmala Sitharaman first announced the prospect of direct listing for Indian companies in GIFT-IFSC exchanges. Now, with the government’s notification, this vision is materializing into a tangible reality.
Government’s Official Communication
The Finance Ministry, through a released statement, disclosed that the Department of Economic Affairs has issued a notification detailing the terms and conditions for the direct listing of Indian companies in GIFT-IFSC.
Simultaneously, the Ministry of Corporate Affairs (MCA) has rolled out the Companies (List of Equity Shares in Permissible Jurisdiction) Rules, 2024, providing a comprehensive framework for Indian public sector companies to issue and list their shares on international exchanges.
Attracting Foreign Investors and Facilitating Growth
The direct listing of Indian companies in GIFT City is poised to simplify the investment process for foreign investors. Notably, they will no longer be required to convert their currency into rupees to invest in the shares of these companies. This strategic move allows stocks to be traded in dollars, eliminating the need for currency conversion and hedging, ultimately lowering associated costs.
The Finance Ministry expressed optimism, stating, “This initiative will encourage foreign investment, open growth opportunities, and expand the investor base for Indian companies.” Meanwhile, the Securities and Exchange Board of India (SEBI) is actively working on issuing guidelines to further streamline the process for listed Indian companies.