The Indian government has put on hold its plan to allow domestic companies to list on foreign stock exchanges. The news agency Reuters quoted government officials and industry sources as saying that the government first wants to strengthen the Indian capital market. This may come as a blow to foreign funds and stock exchanges of the government, who wanted to cash in on the boom in India’s tech industry.
Earlier last year, there was a report quoting some government officials that the government is going to bring a new rule to allow Indian companies to be listed on foreign stock exchanges and this rule will be issued in February. However, now the government seems to be suddenly withdrawing from this policy.
Reuters quoted three senior government officials as saying that the Indian government has put the plan on hold because it believes the local capital market has enough potential for companies to raise money and get good valuations. The Finance Ministry did not comment on the news.
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The Indian stock markets have seen tremendous growth in the last two years. Indices have touched record levels due to participation from retail investors in record numbers and high availability of money in the market due to Corona pandemic. In view of this boom in the market, many tech companies have launched their Initial Public Offer (IPO) in the last few days.
More than 60 companies brought IPO in 2021
In the year 2021, more than 60 companies have been listed on the Indian stock market and they have raised a record amount of more than 13.7 dollars. The recent Russia-Ukraine crisis has led to volatility in the Indian stock market along with markets around the world and some companies have postponed their IPO plans.
US venture capital firms did lobbying
Meanwhile, US venture capital firms such as Tiger Globus and Sequoia Capital have urged Prime Minister Narendra Modi to allow Indian companies to be listed in overseas markets so that they can fetch better valuations.
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