Coming Soon: Indian Depository Receipts (IDR)

Domestic investors may get to invest directly in foreign companies by the end of this year. SEBI chairman indicated yesterday that guidelines to allow foreign companies to access Indian capital markets would be issued in the near future.

When allowed, overseas companies would be able to make equity offerings in the Indian market in the form of depository receipts. These issues would be similar to the ADR / GDR issues of Indian companies in overseas markets.

SEBI has reportedly submitted its recommendations to the department of company affairs. The revised recommendations have reportedly diluted some of the tough eligibility requirements for issuing companies regarding dividend paying track record and issue size.

Companies from neighbouring countries, especially SAARC countries, may find it attractive to access the Indian markets. For them, raising money from the Indian markets would be easier and cheaper than US or European markets.