India, UK explore possibility of shares listing at GIFT City and LSE

The United Kingdom has received the first confirmation from India that it would explore the London Stock Exchange (LSE) for overseas direct listing of Indian companies, British Chancellor of the Exchequer Jeremy Hunt said on Monday.

“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,” Hunt said while addressing media persons in a joint briefing with his Indian counterpart Nirmala Sitharaman after the 12th India-UK Economic and Financial Dialogue.

Sitharaman, however, said: “As I think we’ve mentioned earlier once, we are looking at this, commencing with the International Financial Services Centre (IFSC) at GIFT City. Once that is done, we may look at moving further. Soon after that, it is business for India to consider listing in London.” Under the current regulations, Indian firms are not allowed to list directly on overseas exchanges.

They can only list on foreign exchanges through instruments, such as depository receipts.

In July, India said it would allow companies to list on exchanges registered at the IFSC, a new financial tax-neutral hub housed in Gujarat International Finance Tec-City (GIFT City), to give companies easier access to foreign capital.

The UK is also looking at changes in the regulatory framework of its pensions and insurance funds, Hunt said. “There’s a very strong desire on their part to invest more in productive assets. And we have huge pools of capital ready to be harnessed. So this is not just inside the UK, but also in India; we had very good discussions of what we need to do,” he further said.

Both sides have agreed to develop a work plan to support their respective pension and insurance sectors to channel private capital into their economies, the joint statement said. They also agreed to increasing trade in reinsurance.

Hunt said that London is the world’s most international financial centre and second-largest financial centre across the globe, and the majority of its asset managers do not invest in India. "India is one of the most exciting places anywhere in the world that investors wish to consider. It's going to be the fastest-growing G20 country this year and has a very clear road map to becoming a developed nation by 2047,” Hunt said.

The two countries also launched the UK-India infrastructure financing bridge. "It is a collaborative venture between NITI Aayog and the City of London aimed at harnessing the collective expertise in planning and implementing major infrastructure projects," Sitharaman said. She also mentioned the UK's willingness to further extend its footprint in the GIFT City.

Both sides also discussed the negotiations for a Bilateral Investment Treaty in parallel with the talks for a Free Trade Agreement. “There was definitely some discussion on the investment aspects of the FTA because the investment side of it comes under the Finance Ministry," Sitharaman said.

The finance minister said that the intention on both sides is to expedite the discussion so that some quick agreements can lead to finally signing the FTA. “As you're aware, we have agreed to have the investment negotiations running parallel to the goods and services trade negotiations. So, we will be looking at points where there are convergences, and points on which further discussions need to be held,” she said.

The two countries have also agreed to engage further on financial services links, while taking note of the interim recommendations of the India-UK Financial Partnership connectivity workstream. They will also explore investment opportunities including through private sector in the banking sector in both countries.

India’s discussions with the UK encompassed collaborations to secure inclusive growth and resilience, advancing climate action, and forging partnerships through technology and infrastructure transformation.

"The success of the UK-India Green Growth Equity Fund is a testament to the efficacy of public-private partnerships in channelling large-scale, sustainable finance. Building our partnership, we will continue to explore new avenues of investment in shared priority sectors," Sitharaman further said.

Hunt also congratulated India on the success of the recently concluded G20 summit under challenging circumstances. "It was a very important thing for the world that this should be successful," he added.