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The Union Finance Ministry announced on Thursday that it has amended the Securities Contracts Regulation Rules (SCRR), 1956 to ease the requirements for Indian companies seeking to list on international exchanges within International Financial Service Centres (IFSCs) at par with global standards. 

The amendments will facilitate easier access to global capital for Indian startups and companies in the sunrise and the technology sectors, the Finance Ministry said.

‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’ under the Foreign Exchange Management (Non-Debt Instruments), 2019 and Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 together, provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international stock exchanges at GIFT-IFSC.

To facilitate this, the new rules stipulate that for public Indian companies desiring to list solely on international exchanges in IFSCs, the minimum offer and allotment to the public as per the offer document shall be at least 10 per cent of the post-issue capital.

The continuous listing requirement for such companies has also been set at 10 per cent, as outlined under Rules 19 (2)(b) and 19A of the SCRR.

By reducing these thresholds, the amendments in SCRR facilitate easier access to global capital for Indian startups and companies in the sunrise and the technology sectors. This will particularly benefit Indian companies going global and having ambitions to look at opportunities for expanding their presence in other markets, according to the Finance Ministry statement.

This initiative underscores the government's commitment to providing an agile and world-class regulatory and business environment in the IFSCs, thereby strengthening India's position in the global financial system, the statement added.

As part of the government’s initiative to boost IFSC, Finance Minister Nirmala Sitharaman in the Budget for 2024-25, announced tax exemptions for retail schemes and exchange-traded funds (ETFs) set up in Gift City at Ahmedabad in Gujarat.

With the changes, these schemes will now enjoy tax exemptions similar to that of category III Alternative Investment Funds (AIFs) set up in the IFSC.

Category III funds include AIFs that employ complex trading strategies and may invest in listed and unlisted derivatives. These include hedge funds and private investment in public equity deals.

Further, finance companies set up in the IFSC will also be exempted from Section 94B of the Income Tax Act, popularly referred to as thin capitalisation rules.