Finance Minister Nirmala Sitharaman announced on Monday that India is reevaluating the possibility of allowing domestic companies to be listed on foreign stock exchanges, including the London Stock Exchange. This move has the potential to provide South Asian startups with access to foreign capital for their expansion.
Among the foreign exchanges under consideration, the London Stock Exchange stands out as one of the world’s largest and notably rich in technology-focused stocks, following the likes of the New York Stock Exchange and Nasdaq. India had previously contemplated permitting overseas listings for Indian firms in 2020 but had deferred the decision.
British Finance Minister Jeremy Hunt expressed his satisfaction with India’s decision, stating, “We are particularly pleased to have taken a significant step forward with India’s confirmation of exploring the London Stock Exchange as an international destination for the direct listing of Indian companies,” during a press conference.
India has been exploring various avenues over the years to help local companies gain access to a wider pool of capital and achieve higher valuations. These new considerations coincide with a period where numerous startups in India are contemplating going public.
The Indian stock exchanges have traditionally been dominated by financial services companies, consumer firms, as well as energy and material operators. An analysis by Mirae Asset earlier this year suggested that there will be a pronounced growth in tech stocks within the Indian stock exchange index over the next two decades.
As Indian startups contemplate their public offerings, they are likely to prefer exchanges where the audience possesses a deeper understanding of their business models and is more comfortable with the risk profiles associated with tech-oriented companies.
