While the Narendra Modi government moved amendments to the Companies Act last year to allow direct listing on foreign exchanges, it did not comply with the required amendments to the Income Tax Act. This has resulted in some companies choosing other methods of listing overseas.
Demands for amendments to the tax law have not gone away and government sources indicated that proposals for action in the budget are back on the list before the finance ministry.
Some representatives of the corporate sector had also advocated necessary amendments before Modi.
Anurag Jain, secretary of the Department for Promotion of Industry and Internal Trade, told reporters on Sunday that the government was considering the proposal.
While a section within the government believes that the Indian market and startup ecosystem has evolved for domestic entities to be listed within the country, there are suggestions that provide the necessary alternative.
The corporate sector needs Otherwise, many startups, such as Flipkart, have moved to other jurisdictions such as Singapore and are looking for a listing in the US.
In any case, sources said, there will be only a handful of companies that will exercise the option of listing on exchanges in the US, UK, Singapore or through the International Financial Center in GIFT City.
“The compliance cost for listing on the NYSE or Nasdaq is pretty high and you’ll have four or six companies exercising the option in the immediate future,” a source said. Market players said that providing the necessary framework, which will be followed by the detailed regulations of the Ministry of Corporate Affairs, will be listed by August 15, around the 75th anniversary of India’s independence.
In any case, last year, renewable energy player Renew Power opted for the special purpose acquisition company (SPAC) route to list on Nasdaq after awaiting clarity on tax exemptions for direct listings. In the absence of necessary regulations, more companies may explore this option.
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