The Indian government is considering the possibility of allowing overseas listings for startups, with the potential inclusion of the GIFT City as a listing destination. Despite amending the Companies Act a few years ago, the government has not yet implemented the rules for overseas listings due to resistance from the revenue department. The department is hesitant to deal with the issue of waiving capital gains tax that would arise from listing shares. As a result, some Indian companies have chosen the Special Purpose Acquisition Company (SPAC) route for overseas listings.
Although an overseas listing would provide Indian companies an opportunity to explore new markets, it does not rule out the possibility of domestic listings. The government, along with the Department of Economic Affairs and the Ministry of Corporate Affairs, is now revisiting the issue and is expected to establish guidelines. One objective is to encourage startups and other companies to raise funds by listing on exchanges in the GIFT City, a developing financial hub. In recent years, the government has granted tax concessions to encourage Indian companies to utilize the GIFT City platform and expand their global presence.
Investors and market players, however, hold reservations about listing Indian companies overseas. They argue that Indian companies have limited recall among investors, and the thin trading volumes would result in limited coverage by brokerages. Therefore, many suggest that it would be more advantageous for Indian startups to list domestically, where investors are more familiar with their businesses and operations.
In conclusion, the Indian government is actively discussing the possibility of overseas listings for startups and other companies. While the GIFT City listing is being considered, the government also recognizes the importance of domestic listings to strengthen the domestic market. Investors and market participants have voiced concerns about the appeal and trading volumes of Indian companies listed overseas. Ultimately, the decision between overseas and domestic listings will require careful consideration of the specific circumstances and preferences of each company.
