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    Budget 2024 may give Indian startups' HQ relocation plans a fresh lease of life

    Synopsis

    Indian startups domiciled abroad may relocate their headquarters to India via GIFT City, utilizing its SEZ for tax benefits. Amendments this year enabled unlisted firms to directly list on GIFT IFSC. IFSCA aims to finalize GIFT City listing norms by July for August implementation, facilitating e-commerce and tech firms' return like Razorpay, Zepto, Meesho to tap into India's growing stock market and access capital through global listings in GIFT City or specific overseas jurisdictions.

    IT companies are adopting a strategy from startups and web commerce.iStock
    Indian startups that are currently foreign-domiciled may be given a chance to move their headquarters back to India through a tweak in GIFT City norms, TOI reported on Sunday.

    The intended route involves utilizing GIFT City's special economic zone, which offers tax benefits. Earlier this year, legislative amendments allowed unlisted companies to directly list on the GIFT IFSC. Gujarat-based GIFT City operates as an offshore financial center specializing in foreign exchange.

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    To bolster its competitiveness against global financial hubs like Dubai and Singapore, the government has offered tax breaks and other incentives to attract companies to GIFT City. The aim is to position GIFT City as a preferred destination for financial activities, leveraging its strategic location and favorable regulatory environment.

    K Rajaraman, the head of the International Financial Services Centres Authority (IFSCA), recently announced that the government aims to release the finalized regulations for direct listings at GIFT City by early July. IFSCA serves as the regulatory body for the GIFT IFSC. Rajaraman expressed optimism that companies would be able to initiate listings under the updated guidelines by August.

    "Based on our interactions with various users, we have realised that our regulations need a little update. Therefore, what we have done in the last two months is to update our listing regulations," TOI quoted Rajaraman as saying.

    He mentioned that e-commerce and technology firms, along with foreign entities heavily involved in Indian markets, are likely candidates for direct listing at GIFT City. This move aims to facilitate the return of unicorns like Razorpay, Zepto, and Meesho to India, enabling them to tap into the expanding Indian stock market.

    The government's decision to permit domestic companies to list directly on foreign exchanges in specified jurisdictions enhances capital-raising avenues for Indian businesses. Initially, listings will be allowed at the International Financial Services Centre (IFSC), with plans to expand to seven or eight specific overseas locations later on.

    "Our agenda for 2047 is not that Indian companies remain in India, but Indian companies becoming global champions," Rajaraman said. The IFSCA chairman further added that if Indian companies have to become global champions, the regulators need to provide them with all types of capital - dollar or rupees.

    "It depends on the company, if they want to deal in INR, they can list in India, but if they want to deal in a Dollar or a Euro market, they can list in GIFT City," he said.



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