Listing Process
According to market participants, companies may find the listing process in GIFT City relatively efficient due to supportive regulatory policies aimed at promoting the international financial centre.
Since authorities are actively encouraging companies to explore this route, approvals are often processed quickly. However, the regulatory framework is still evolving, which means certain processes may continue to change as the market develops.
Despite the simplified process, the trading ecosystem at GIFT City is still in its early phase. One of the main concerns remains liquidity, as trading volumes on these exchanges are currently limited.
Experts note that SME exchanges in India also experienced similar challenges when they were introduced more than a decade ago. Over time, increased participation helped improve liquidity, and a similar trajectory could unfold for GIFT City listings.
Regulatory Differences Compared to Domestic IPOs
Companies choosing between domestic IPOs and GIFT City listings must consider several regulatory differences.
The framework implemented by IFSCA differs from the rules enforced by the Securities and Exchange Board of India (SEBI) in areas such as disclosure requirements, governance standards, pricing norms, and lock-in periods.
In the domestic IPO market, companies must provide extensive disclosures when filing their draft prospectus. These include detailed information about promoters, shareholding structures, and the exact utilisation of funds raised from the issue.
In contrast, disclosure requirements under the current IFSCA framework are comparatively broader and less detailed. Companies are not required to provide the same level of granular information that is typically mandatory under SEBI regulations.
Corporate governance requirements also vary between the two systems. While SEBI mandates detailed disclosures regarding board composition and governance practices during the IPO filing stage, the IFSCA framework has not yet introduced similarly comprehensive rules.
Lock-in and Convertible Securities
Another area of difference involves lock-in requirements for promoters and early investors.
Under SEBI regulations, a portion of promoter shareholding must remain locked in for a period ranging from 18 months to three years, depending on the issue structure.
In comparison, the GIFT City framework requires promoters and controlling shareholders to maintain their holdings for a minimum of six months after listing. Other shareholders are not currently subject to mandatory lock-in restrictions.
Convertible securities are also treated differently. Domestic IPO rules generally require companies to convert all outstanding convertible instruments before filing their draft offer documents. However, the current IFSCA rules do not impose such strict pre-listing conversion requirements.
Tax Benefits and Investor Base
One of the major attractions of the GIFT City platform is its tax-efficient structure and international orientation.
Capital raised through these listings is typically denominated in US dollars rather than Indian rupees. This structure makes the offering more appealing to foreign investors who prefer investments that avoid currency fluctuations.
Unlike domestic IPOs, which largely attract participation from Indian mutual funds, high-net-worth investors, and retail participants, GIFT City listings are primarily designed to draw global investors.
The platform also offers several tax advantages, including exemptions from securities transaction tax and stamp duty. In addition, non-resident investors may benefit from favourable capital gains tax treatment when investing through the IFSC exchanges.
Another advantage is the ease of repatriation, allowing investors to move funds freely in foreign currency.
Because of these characteristics, companies targeting international capital markets may find this listing route particularly attractive.
However, some experts believe that highly profitable companies may still prefer domestic listings due to strong demand from Indian institutional investors.
Instead, early-stage or growth-focused companies could be more inclined to explore the GIFT City option, especially if they are seeking overseas investor participation.
Cost of Listing
When comparing expenses, the cost of listing in GIFT City appears broadly similar to that of SME IPOs.
An analysis of recent SME listings suggests that companies typically allocate a portion of the issue for market-making activities in order to maintain trading liquidity.
In the case of XED, approximately five percent of the issue has been earmarked for a market maker. SME IPOs generally allocate around six percent of their issue size for the same purpose.
Overall listing expenses for the company are estimated at around $1.2 million, which represents roughly 10 percent of the total issue size.
For SME IPOs, issue-related costs generally average about nine percent of the offering size, though the exact figure can vary significantly depending on the transaction.
This indicates that the primary difference between the two routes may lie less in costs and more in regulatory structure and investor accessibility.
Delisting Rules
Domestic exchanges in India currently operate under well-defined delisting regulations established by SEBI. These rules provide detailed mechanisms for both voluntary and compulsory delisting, along with structured exit pricing to safeguard investor interests.
The GIFT City framework, however, is still developing similar processes. Detailed procedures for delisting and shareholder exits are expected to evolve as the market matures and trading activity increases.
For companies evaluating this listing route, the evolving regulatory environment remains an important factor to consider.
Future Outlook
The long-term viability of GIFT City IPO listings will depend largely on the success of the first few companies that choose this path.
If early listings attract strong investor interest and demonstrate healthy trading volumes, the platform could gain wider acceptance among companies seeking international capital.
Some market observers believe that dozens of companies could eventually explore this route over the next few years if the ecosystem develops successfully.
However, the market infrastructure at GIFT City is still expanding, and broader participation will likely take time.
For now, companies must weigh factors such as liquidity, regulatory clarity, and investor access when deciding whether to pursue a domestic SME listing or explore the GIFT City alternative.
Disclaimer
This article is intended solely for informational purposes. The information presented is based on publicly available sources and market discussions. While reasonable efforts are made to ensure accuracy, IPORupee does not guarantee the completeness or reliability of the information. Readers should conduct their own research or consult financial professionals before making investment decisions.
