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Many fin cos interested in IDRs: Govt official
The planned Standard Chartered PLC USD 1 billion Indian Depository Receipt issue is expected to happen in the next few months. CNBC-TV18 learns the issue could well just be the beginning. CNBC-TV18's Siddharth Zarabi and Nayantara Rai report.
The planned Standard Chartered PLC USD 1 billion Indian Depository Receipt issue is expected to happen in the next few months. CNBC-TV18 learns the issue could well just be the beginning. CNBC-TV18's Siddharth Zarabi and Nayantara Rai report.
Several more foreign financial sector firms and power generating utilities are exploring the possibility of raising funds through an Indian listing, government officials have told CNBC-TV18. The official added that companies from the United States, the United Kingdom, South Africa, and Nepal are also interested in issuing IDRs. In fact, the Indian government is informally encouraging foreign companies to issue IDRs.
In 2004, India had allowed foreign firms to issue IDRs, but no such issues have happened so far. Despite a global software company being keen on an IDR to issue stock options to its Indian employees, the plan was dropped as the issue size was too small. There is need for clarity on the tax treatment of the instrument, as IDRs are Indian instruments with the underlying asset being overseas.
The tax issue will be settled in the forthcoming general budget through an amendment to the Income Tax Act which will spell out the concept of such an instrument and ensure parity in tax treatment. Once that happens, Indian stock exchanges will aggressively woo IDRs from overseas companies, who wish to raise funds in India.
That could well be the beginning of a new wave of issues.
