Illiquidity, ecosystem maturity key challenges for GIFT City IPOs

GIFT City, despite offering tax incentives, faces challenges like illiquidity, regulatory overlaps, and an underdeveloped ecosystem, deterring startups from listing. Compliance complexities arise from dual regulations by Sebi and IFSCA. The legal and operational frameworks are still evolving, impacting investor participation and confidence. IFSCA regulates everything that happens inside GIFT City. However, if a company is already listed under Sebi-regulated stock exchanges in India, they will have to follow the Indian regulator’s norms too. “This creates double compliance and confusion. This needs to be streamlined,” Rajul Bohra, partner at JSA Advocates & Solicitors, said. For already listed companies in India, Sebi is yet to finalise guidelines to fully operationalise direct or dual listing on IFSC exchanges. Though the IFSCA was established in 2020, it took even more years to crystallize the specific framework for listing of securities. It was in August 2024 that its Listing Obligations and Disclosure Requirements Regulations were notified. This means that for the better part of GIFT City’s existence, issuers had no clear, tested regulatory pathway to list equity on IFSC exchanges, Bohra added. Read more