India’s GIFT City exchange eyes first foreign-currency equity listing

India’s NSE International Exchange (NSE IX), located in Gujarat’s flagship GIFT City, is set to attract its first foreign-currency-denominated equity listing this quarter, in what officials say is a major step toward establishing the financial hub as a global fundraising centre.

According to Bloomberg, the exchange is initially targeting unlisted companies for this debut listing. These may include Indian firms with foreign shareholding structures as well as overseas entities registered in places like Silicon Valley or Delaware.

V. Balasubramaniam, chief executive of NSE IX, told Bloomberg the move represents an opportunity for Indian companies to access international capital while reducing currency risks and broadening their investor base.

GIFT City’s ambition to rival global financial hubs

The Gujarat International Finance Tec-City, widely known as GIFT City, is one of Prime Minister Narendra Modi’s flagship projects designed to position India as a world-class financial centre on par with Dubai or Hong Kong.

As Bloomberg notes, the zone offers a range of incentives, including exemptions from certain taxes and regulatory requirements, aiming to make it an attractive destination for international capital raising. This special status is intended to help Indian firms raise funds more efficiently while luring global investors looking for favourable conditions. Industry leaders argue that just as Hong Kong’s stock exchange became a springboard for Chinese companies to go global, GIFT City can help Indian corporates achieve similar ambitions.

Building an alternative to traditional overseas fundraising

Indian firms have long used instruments like American Depository Receipts (ADRs) to tap overseas markets. According to Bloomberg, companies in India raised over $20 billion through initial share sales last year, reflecting strong appetite for equity fundraising.

However, a foreign-currency listing within GIFT City offers a new onshore avenue for raising international capital. By allowing companies to issue shares directly in foreign currencies, it can reduce the costs associated with currency conversion and hedging, making overseas expansion strategies more viable.

Officials also see the new mechanism as a way to showcase the growing maturity of India’s capital markets and provide companies with an alternative to traditional domestic exchanges.

Regulatory coordination to enable future growth

Bloomberg reports that the Securities and Exchange Board of India (SEBI) is working with the International Financial Services Centres Authority (IFSCA), GIFT City’s unified regulator, to address outstanding regulatory hurdles. Once these issues are resolved, already-listed Indian companies will be able to raise additional capital through GIFT City in the form of separate dollar floats or follow-on public offerings. This could greatly expand the scope of the new international exchange.

Another key incentive for investors is the absence of securities transaction and capital gains taxes within GIFT City, which authorities hope will drive foreign inflows and cement the zone’s appeal as a regional financial hub. With five to six companies already preparing to list, according to Bloomberg, the first foreign-currency equity listing at NSE IX is set to mark an important milestone in India’s ongoing push to modernise its financial sector and compete on the world stage.