India to explore London Stock Exchange for direct listing of Indian companies

Finance Minister Nirmala Sitharaman with UK Chancellor of the Exchequer Jeremy Hunt

India will explore the possibility of direct listing of Indian companies at the London Stock Exchange (LSE), as per a joint statement issued following the conclusion of the 12th India-UK Economic and Financial Dialogue in New Delhi on September 11.

"We are particularly pleased to have made a big step forward with the first confirmation by India that it will explore the London Stock Exchange as an international destination for the direct listing of Indian companies," UK Chancellor of the Exchequer Jeremy Hunt said.

Finance Minister Nirmala Sitharaman, who was addressing alongside Hunt, said that India will first rollout the proposal to allow Indian companies, both listed and unlisted, to list their shares directly on the exchanges at the International Financial Services Centre (IFSC) before considering other exchanges. "At this stage we have said very clearly we are looking at listing on IFSC first," she added.

The Indian government has been working on framing regulations pertaining to payments and settlements for direct listing of companies on IFSC exchanges, which is expected to be finalised in the next few months, K Rajaraman, chairman of the IFSC-A said last week.

Hunt, added "there is a new pensions and insurance partnership" between the two countries, along with the establishment of a knowledge and expertise sharing mechanism.

"London is the world’s most international financial centre - the second largest financial centre in the world - but the majority of our asset managers don’t invest in India. So, there is a huge opportunity. We are looking at changes to the way our pensions and insurance funds are regulated because there is a very strong desire on their part to invest more in productive assets. And we have huge pools of capital that are ready to be harnessed," Hunt stated in the briefing.

The two sides have also decided to deepen their "partnership on the development of GIFT City", he added.

Sitharaman told reporters that India and the UK "are highly encouraged" by the intensified collaboration in the area of financial services. "The UK expressed willingness to further extend its footprint in the GIFT City IFSC and foster a robust fintech partnership," she said.

Hunt and Sitharaman also announced the launch of the "new UK-India Infrastructure Financing Bridge". This is a collaborative venture co-led by India's topmost government think-tank NITI Aayog and the City of London Corporation "aimed at harnessing collective expertise in planning and implementing major infrastructure projects", the Indian finance minister explained.

Next stop: FTA

Hunt stressed that the two countries are moving towards the inking of a Free Trade Agreement (FTA) that would further cement their bilateral trade ties.

"The next step for this is a comprehensive Free Trade Agreement and bilateral investment treaty and I know discussions are ongoing as to how to finalise those as soon as possible," he said. Sitharaman concurred with his view, but suggested that the negotiations will continue over the point of differences related to the proposed FTA.

"As you know, we agreed to have the investment negotiations (on FTA with UK) running parallel to the goods and services trade negotiations. So, we will be looking at points where there are convergences and if there are points on which we have to have further discussions, we will hold it. The keenness on both the sides is to conclude it as soon as possible," she said.

Sitharaman also noted that there were some discussions with the UK on the "investment aspects" of the FTA. "The intention on both the sides is to expedite the discussions so that some quick agreements can lead to finally signing the FTA," she added.

The statement comes two days after Prime Minister Narendra Modi and his UK counterpart Rishi Sunak, in their bilateral meeting at sidelines of the G20 summit, agreed to "work at pace" towards signing the much-anticipated FTA.

"The Prime Minister [Sunak] reiterated the UK's ambition to deliver a landmark trade deal which benefits businesses and workers in both countries and grows our trade in both goods and services," a Downing Street spokesperson said on September 9.