Explanation – If an Indian company is listed on foreign stock exchanges, it can potentially benefit from: Increased visibility and exposure to a wider pool of investors, Access to foreign capital markets, Enhanced liquidity and trading volumes, Higher valuations and potential for higher returns, diversifying the company’s investor base, access to foreign currency, raising the company’s profile and enhance its brand recognition among international investors and consumers.

However, the challenges include: Increased regulatory and compliance costs, Currency exchange risks, Differences in accounting and financial reporting standards, Communication and cultural barriers, Potential political and economic instability in foreign markets. Companies may need to spend more money on market makers to maintain liquidity. They may also need to deal with higher trading costs. Companies may need to spend more money on marketing and investor relations to reach new investors. Companies may need to comply with more stringent accounting and reporting standards.

Further, currently, any company already listed in India is eligible for foreign secondary listing. Now, the government has allowed certain unlisted companies to directly list on foreign stock exchanges.

However, unlisted companies are unlikely to be allowed to list anywhere they want. The government is expected to provide a list of jurisdictions where Indian firms will be allowed to list. IFSC in Gift City, Gandhinagar is expected to be part of permitted jurisdictions for overseas listing.

Source: ForumIAS