While the Narendra Modiled government pushed for amendments to the Companies Act to allow direct listing on foreign stock exchanges last year, it failed to follow the necessary changes to the Income Tax Act. This has caused some companies to opt for other means of registering overseas.
The demand to change the tax law has not disappeared, and government sources have indicated that the proposal is back on the finance ministry’s list for action in the budget.
Some of the business sector representatives had also argued for the changes required before Modi.
On Sunday, Anurag Jain, secretary of the Department for Promotion of Industry and Domestic Trade, told reporters that the government was considering the proposal.
Although a section within government believes that India’s markets and the startup ecosystem have evolved to have national entities listed in the country, there are also suggestions that provide the necessary option.
to the corporate sector is necessary. Otherwise, several startups, such as Flipkart, have moved to other jurisdictions such as Singapore and are considering listing in the United States.
In any case, according to sources, there will only be a handful of companies that will use the opportunity to list on stock exchanges in the US, UK, Singapore or through the International Financial Center. by GIFT City.
“The compliance cost for listing on the NYSE or the Nasdaq is quite high and at best you will have four or six companies using the option in the immediate future,” a source said. Providing the necessary framework, which will be followed by the detailed rules of the Ministry of Trade Affairs, will allow a listing around August 15, the day of India’s 75th independence anniversary, market participants said.
Either way, last year, renewable energy player ReNew Power took the Special Purpose Acquisition Company (SPAC) route to Nasdaq listing after waiting for clarification on exemptions. tax for direct listing. In the absence of the required set of rules, more companies could explore this option.
