The government has updated overseas listing rules to allow more Indian companies to raise capital via GIFT City. The changes permit firms with high debt to list if they secure strong institutional support, though early-stage liquidity and execution risks remain.
The Ministry of Corporate Affairs has introduced the 'Companies (Listing of Equity Instruments in Permissible Jurisdictions) Amendment Rules, 2026,' marking a significant shift in how Indian companies can access global capital. The primary goal of these amendments is to simplify the pathway for Indian public companies to list on international exchanges within the GIFT International Financial Services Centre (IFSC).
Under the revised framework, the definition of equity has been broadened. Companies can now use instruments like convertible debentures and preference shares for their overseas listings, rather than being restricted to standard equity. This is intended to give businesses more flexibility in how they structure their capital raising to match their long-term financial goals.
A key change targets companies currently struggling with their balance sheets. Firms with negative net worth—meaning their liabilities exceed their assets—are now eligible to list, provided they guarantee that at least 75% of the offer is allotted to qualified institutional investors. This creates a specific route for companies needing to raise funds for turnaround strategies, though it relies heavily on the appetite of large professional investors.
Regulators have also addressed the entry barriers for companies with a history of payment defaults. The mandatory disqualification period for entities that have defaulted on payments has been reduced from two years to six months, provided they meet strict compliance and regulatory standards. This change aims to provide a faster route to market for companies that have resolved past financial issues.
The strategic focus of these rules is to build the GIFT IFSC into a globally recognized hub for capital. By allowing a wider range of companies to list, the government hopes to increase trading volumes and attract a more diverse pool of international investors to the exchange.
However, investors and market observers remain cautious about the execution of these plans. While the rules are more accommodating, the GIFT City ecosystem is still in an early stage of development. Past events, such as the withdrawal of the first major GIFT City IPO by XED Executive Development Ltd due to low subscription levels, highlight the ongoing challenge of building sufficient liquidity in the market.
For companies aiming to use these new rules, the main risk is market appetite. Relying on institutional investors for 75% of an offer creates significant execution pressure, as institutional demand for USD-denominated listings in GIFT City is still being tested. Additionally, the integration between domestic and international markets involves complexities like share transfer protocols and varying disclosure requirements that companies must manage.
Going forward, the success of these reforms will depend on how many companies actually utilize these pathways and whether they can attract consistent interest from institutional investors. Market participants will likely track the frequency of new listings and the participation rates of institutional buyers as the primary indicators of whether these rule changes are effectively bridging the gap between Indian firms and global liquidity.