According to Union Finance Minister Nirmala Sitharaman, the government has decided to permit the direct listing of both listed and unregistered firms on foreign exchanges at the IFSC (International Financial Services Centre).
“I had stated in May 2020 that Indian public businesses will be allowed to list their securities directly in foreign countries. During a Mumbai event, Sitharaman stated, “I’m happy to announce that the government has reached a decision to authorise direct listing of listed and unlisted firms on the IFSC markets.
According to Sitharaman, the action will allow “start-ups and businesses of a similar sort to access the global market through GIFT IFSC.”
“This will also facilitate access to global capital and result in better valuation for Indian companies,” she said at an event to launch the AMC Repo Clearing Ltd. and the Corporate Debt Market Development Fund (CDMDF).
Either depository receipts or the listing of their debt instruments on foreign markets are now the only ways for Indian corporations to access international equity markets. Although the structure has not yet been established, the Centre revised the Companies Act in 2020 to permit the direct listing of Indian firms on overseas stock markets.
It is important to emphasise that the government’s ambition for the GIFT-IFSC goes well beyond conventional finance and extends into the field of thought leadership, according to Sitharaman.
Code for the single securities market
The Minister expressed his opinion that it is crucial to move forward with the plan to combine the three separate laws — the Depositories Act of 1996, the SEBI Act of 1992, and the SCRA (Securities Contracts Regulation Act) of 1956 — into a single act with an updated and rationalised set of provisions. This would create a single securities market code.
The unified securities market code is designed to be flexible in the future, taking into consideration long-term changes and supporting ease of doing business.
“This will also cater to the developmental and regulatory needs of the country’s capital markets…
“A lot of groundwork has already been done. We expect this new code to become a reality soon,” Sitharaman said.
The Minister noted that the major objectives of our financial sector laws at this point in our economic growth should be market expansion and investor protection.
She stated that investors should be provided with the required protection, and our market should be empowered to make it simple to raise cash.
In order to attract investments, Sitharaman emphasised that India competes not just with other rising markets but also with mature nations. As a result, the nation must improve the conversion of domestic savings into financial assets by facilitating access to the financial markets and bolstering systems for resolving investor complaints.
“We may also have a regulatory impact assessment to critically assess the positive and negative effects of proposed and existing regulations and non-regulatory alternatives.
“It is an important element of evidence-based policymaking, and I feel this can enhance accountability and transparency in the policy and decision-making processes,” she said.
In order to facilitate business, the Minister noted that deadlines for deciding applications under various rules should be specified.
All financial sector regulators must take into account laws that are commensurate to hazards and take into account risk reduction by regulated businesses using technology-enabled systems.
The establishment of an atmosphere that is favourable for beginning and operating enterprises, the preservation of market integrity, and the maintenance of market stability, according to Sitharaman, are the three things that are most crucial for the nation.
