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Indian companies, both listed and unlisted, will soon be able to list their shares directly on the exchanges at the International Financial Services Centre (IFSC) in Gujarat, Finance Minister Nirmala Sitharaman said on Friday.
The move will enable “start-ups and companies of like nature to access the global market through GIFT IFSC”, Sitharaman said. “This will also facilitate access to global capital and result in better valuation for Indian companies,” she added.
The finance minister was speaking at the launch of the Corporate Debt Market Development Fund (CDMDF) and AMC Repo Clearing Limited (ARCL) in Mumbai.
The announcement came as a follow-up to an earlier decision by the government to allow direct listing of Indian companies in foreign jurisdictions.
“We are competing with not only other emerging markets, but also with the advanced economies to attract investments. We need to enhance the mobilisation of domestic savings towards financial assets by easing access to financial markets and strengthening the investor grievance mechanism,” she said.
Earlier this month, the Nifty contracts being traded on the Singapore Exchange (SGX) were successfully migrated to the NIFTY IFSC at Gujarat International Finance Tec-City (GIFT City). On July 25, GIFT Nifty derivatives recorded an all-time high turnover at $12.39 billion.
Advocating for a review of regulatory processes, Sitharaman urged all financial regulators to set timelines to decide on applications and maintain a balance between light-touch regulation and full-fledged supervision.
She reiterated that public consultations would be made integral to the process of regulation, and that there was a need to review outdated norms.
“Such reviews need to be comprehensive and become a permanent part of the regulatory lifecycle. Time limits to decide the applications under various regulations should be laid down in the interest of ease of doing business and for being responsive,” said Sitharaman.
Adding that market regulations should be proportionate to the risk, she called for a regulatory impact assessment to critically assess the positive and negative effects of the proposed and existing regulation and non-regulatory alternatives.
“It is an important element of evidence-based policy making, and I feel this can enhance accountability and transparency in the decision making process,” said Sitharaman.
On the launch of debt backstop facility and ARCL, Ajay Seth, secretary, Department of Economic Affairs, said though it might take time to bring volumes on these platforms, these efforts would lead to a robust development of the debt market.
CDMDF, a ~30,000 crore backstop facility for the debt market, was cleared by the Securities and Exchange Board of India in March, while ARCL was first approved in-principle two years ago.
The corpus for CDMDF will be created by pooling money from debt schemes, excluding passive, overnight, and gilt funds. These will contribute 25 basis points of their assets under management towards the creation of CDMDF. The initiative aims to provide liquidity to debt schemes during periods of market stress.
Meanwhile, ARCL will help regulated entities such as AMCs, insurance companies, market makers, and short-term traders take positions and manage their risks in listed corporate bonds and debentures (non-convertible debt securities), commercial papers, and certificates of deposit.
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