By Nikunj Ohri and Jayshree P Upadhyay
NEW DELHI (Reuters) – Indian government approval will be needed if a local company with shareholders from neighbouring countries such as China wants to list on exchanges registered in a new financial hub, according to rules issued on Wednesday.
The rules lay out how companies can list their shares in the International Financial Services Centre (IFSC) housed in the Gujarat International Financial Tech City (GIFT), which is Prime Minister Narendra Modi’s flagship project.
GIFT-IFSC is a tax neutral financial centre, which aims to compete with hubs like Singapore as it provides fiscal incentives and an easier regulatory environment.
Under the rules released on Wednesday, the government said it will need to approve such listings if the beneficial owner of a company is a citizen of a country which shares a land border with India, or an entity incorporated in such a country.
Although it did not name any countries, the government issued similar rules in 2020 when it tightened scrutiny of investments from companies based in countries with which India shares a land border, a move that delayed billions of dollars of incoming investments by Chinese companies.
The new rules were issued despite a top Indian official telling Reuters in Davos last week that India could ease its scrutiny of Chinese investments if the border between the two remains peaceful, adding that border issues had stabilised.
The rules – which apply to listings on the India International Exchange and the NSE International Exchange at IFSC – state that companies will need to comply with foreign direct investment caps.
Founders and directors of companies exploring such listings must also not be debarred from accessing capital market, the rules added.
(Reporting by Nikunj Ohri and Jayshree Upadhyay; Editing by Kirsten Donovan)