India may allow local firms to directly list on London Stock Exchange

India is contemplating a potential reconsideration of permitting local firms to list on foreign exchanges, according to Finance Minister Nirmala Sitharaman. This signals a potential revival of a plan that was previously put on hold due to domestic opposition and tax-related concerns.

As per current regulations, Indian companies are not authorised to directly list on overseas exchanges; they can only do so through instruments like depository receipts.

The proposal to allow Indian firms to list directly on foreign exchanges was initially introduced in 2020 but was deferred due to concerns regarding potential tax losses and opposition from a segment of the ruling party. This faction was apprehensive about reduced Indian regulatory oversight for domestic firms listing abroad.

Sitharaman made these remarks during a joint press conference with British Finance Minister Jeremy Hunt, held after bilateral discussions following the G20 meetings over the weekend in New Delhi.

Hunt said the Indian government had expressed its willingness to consider permitting Indian companies to directly list on the London Stock Exchange (LSEG). He expressed his satisfaction with this development, emphasizing it as a significant step forward. “We are particularly pleased to make a big step forward to make a first confirmation by India that it will explore the London Stock Exchange as an international destination for the direct listing of Indian companies,” Hunt said.

In 2020, Reuters reported that the London Stock Exchange had been in discussions with several Indian technology firms regarding their overseas stock listings. However, these plans were put on hold by the Indian government.

Furthermore, in July, India announced its decision to allow companies to list on exchanges registered in the International Financial Services Centre (IFSC). This new financial hub, situated in the Gujarat International Financial Tech City (GIFT) in India, was created to provide companies with easier access to foreign capital markets.

“We have mentioned earlier once that we are looking at listing, commencing with the IFSC, so once that is done, we may look at moving further (with overseas listing),” Sitharaman said.

“So at this stage, we have said that we are looking at listing in IFSC first,” she added.

With inputs from Reuters