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 A committee to suggest rules for direct equity listing at India's international financial centre (IFSC) in GIFT city has recommended depositories in the IFSC and the rest of the county be connected to enable this.

A connection between the depositories would enable the issue of new equity shares directly and allow transfer of existing equity shares, its report released late on Wednesday said.

The IFSC operates as a separate financial jurisdiction with different rules from the broader Indian financial markets.

Earlier this month, Reuters reported that new rules, which will likely take effect in April, will allow direct equity listing of Indian firms which aren't already listed on Indian exchanges, at GIFT City.

"The equity shares of Indian companies issued and listed on IFSC exchanges will therefore be held directly by the shareholders in their demat accounts maintained with the depository in IFSC," the committee's report said.

While recommending this as the preferred route, the working group also suggested other options such as opening of nominee accounts on behalf of shareholders in the IFSC with Indian depositories.

The group also suggested that Indian mutual funds may be permitted to participate in direct listings at the IFSC up to a limit of 1% of their assets under management.

Broker dealers should also be permitted as market makers, it added.

The group also recommended a framework for dual listing, where a company is listed both on Indian exchanges and the IFSC.

In such cases, the Indian market regulator's rules, such as minimum public shareholding, would need to be enforced in both jurisdictions, the committee said.