Rules for overseas listing may come up in next budget
The government may announce rules allowing companies to list overseas in the next budget in February, as some issues are yet to be resolved and are under discussion, Revenue secretary Tarun Bajaj said on Wednesday.
The comments confirm a Reuters report that said India would take around six months to announce rules allowing companies to list overseas - taking longer than some expected as the finance ministry irons out issues related to taxation.
The announcement should be some consolation for investors such Tiger Global, Sequoia Capital, Lightspeed and many Indian startups who, in a joint letter last month, urged Prime Minister Narendra Modi to swiftly announce rules governing foreign listings that were given the go-ahead almost a year ago.
The heads of 22 top startups and venture capital firms had written the joint letter.
According to the letter, while several companies are looking to list in India (Zomato being a recent success story and trendsetter), startups need access to international capital to level the playing field with foreign technology giants and be globally competitive. It said the total market capitalisation of all the companies listed in India is about $3 trillion, while the comparable number for the US is $50 trillion.
“We have reached out to
PMO seeking clarity over direct listing of startups overseas. This could bring more capital in India and help in brand building of Indian startups in markets like the US,” one of the founders said.
“Many startups have ‘flipped’ structures to set up companies in Singapore so they could list abroad. They won’t have to do it if this is allowed.” The letter said international stock exchange listings will help “raise the profile of Indian startups, helping them compete on a global stage with startups from other countries”.
The current inability of unlisted companies to tap international markets for raising capital is an impediment to growth and most Indian startups do not have a level-playing field with their foreign counterparts. It also leads to “migration of startups outside India, or flipping”, the note added.
The London Stock Exchange told Reuters last year it had been in talks with several Indian tech firms on overseas listing.