India looking to explore foreign exchanges listing for local firms

On Monday, Finance Minister Nirmala Sitharaman India will be reconsidering allowing local firms to list on foreign exchanges, including the London Stock Exchange, in a move that could allow start-ups in the South Asian nation gain access to foreign capital for growth.

The London Stock Exchange is one of the exchanges that India is considering, which outside of the New York Stock Exchange and Nasdaq, is one of the largest and tech stocks-heavy exchanges.

Earlier India had considered allowing overseas listing of Indian firms in 2020, but later put it on the back burner.

“We are particularly pleased to have made a big step forward with the first confirmation by India that it will explore the London Stock Exchange as an international destination for the direct listing of Indian companies,” said British Finance Minister Jeremy Hunt at a press conference.

The country has been evaluating ways for years to help local firms access broader capital and reach higher valuations, and the new deliberations come at a time when scores of startups in the country are eyeing public listings.

Dominating the Indian stock exchanges include financial services firms, consumer companies, energy and material operators. In an analysis earlier this year, Mirae Asset projected that the Indian stock exchanges’ index will see a disproportional growth in tech stocks in the next two decades.

As Indian start-ups consider going public, they are likely to favour exchanges where the audience possesses a greater understanding of their business models and is more comfortable with the risk profile associated with tech firms.