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India may reconsider allowing local firms to list on foreign exchanges, Finance Minister Nirmala Sitharaman said on Monday, signalling New Delhi could revive a plan put on hold due to domestic opposition and tax concerns.

Under current regulations, Indian firms are not allowed to list directly on overseas exchanges. They can only list on foreign exchanges through instruments such as depository receipts.

The plan to allow direct overseas listing of Indian firms was first announced in 2020, but was shelved following concerns around tax losses and opposition from a faction of the ruling party, which feared less Indian regulatory oversight of domestic firms that list abroad.

Sitharaman was speaking at a joint press conference with British Finance Minister Jeremy Hunt following bilateral talks after the weekend's G20 meetings in New Delhi.

Hunt told the press that the Indian government had said it would consider allowing Indian companies to list directly on the London Stock Exchange.

"We are particularly pleased to make a big step forward to make a first confirmation by India that it will explore the London Stock Exchange as an international destination for the direct listing of Indian companies," Hunt said.

In 2020, Reuters reported that the London Stock Exchange was in talks with several Indian technology firms for their overseas stock listings, before the government shelved allowing overseas listings.

In July, India said it would allow companies to list on exchanges registered in the International Financial Services Centre (IFSC), a new financial tax neutral hub housed in the Gujarat International Financial Tech City (GIFT) in India, to give companies easier access to foreign capital.

"We have mentioned earlier once that we are looking at listing, commencing with the IFSC, so once that is done, we may look at moving further (with overseas listing)," Sitharaman said.

"So at this stage we have said that we are looking at listing in IFSC first."