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Consultation with DPIIT on allowing foreign start-ups with Indian-origin to list on stock exchanges in India
Consultation with DPIIT on allowing foreign start-ups with Indian-origin to list on stock exchanges in India

July 27, 2023

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On July 27, 2023, we participated in a consultation with the Director, Department for Promotion of Industry and Internal Trade (DPIIT) to seek their support in enabling foreign headquartered Indian-origin start-ups to list on stock exchanges in India. Few start-ups and experts from the field of taxation and capital markets also attended the consultation. 

Background of the issue:  

Foreign comapnies are currenlty not allowed to raise equity capital by a primary listing in India. They can do so by either re-domiciling to India or using the depository receipt route. Either of these options are not feasible for start-ups because of compliance issues, significant tax implications etc. 

In this consultation, we highlighted the following:

  1. SEBI’s Expert Committee gave detailed recommendations in 2018 to enable listing of equity shares of foreign companies on Indian stock exchanges. The committee also identified 10 permissible jurisdictions from where companies may be permitted to list their equity shares on Indian stock exchanges. It has been more than 4 years, but the recommendations have not been implemented.
  2. Enabling the listing of Indian-origin foreign start-ups on Indian stock exchanges has benefits not only for the start-ups, but also for:
  • the investors in India, as they increasingly seek to diversify their investment portfolios. Investing in companies who may be incorporated overseas but cater to the market in India, can be a good fit as domestic investors would be investing in businesses familiar to them.
  • the Indian economy, and stock exchanges as this can facilitate the development of specialised investor clusters with valuation expertise specific to tech and internet companies. This will ultimately make Indian stock exchanges more attractive to tech and internet companies that are growing significantly in India and the world.
  • the Government, as more transactions in capital markets can result in more tax revenue.

3. Nasscom's survey results and interviews with start-up founders show that, approximately 16.5% of Indian-origin start-ups have externalised legal structures which prevents them from doing a direct public listing on Indian stock exchanges. All these start-ups would consider raising equity capital through public listing in India, if the regulations are amended to allow for a direct listing.

4. Enabling direct listing, requires a reforms in multiple different regulations – including FEMA regulations, Companies Act and SEBI regulations. Given DPIIT’s leadership in supporting start-ups, we requested DPIIT's support in this matter.

If this topic is of interest to you and you would like to share your views with us, kindly write to us at garima@nasscom.in and policy@nasscom.in.


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Garima Prakash
Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech

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